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Thursday, 2 November 1967


Mr WENTWORTH (Mackellar) - Mr Chairman, the debate on this clause brings into the open the difference between the Minister and myself in this regard. 1 am not worried about the fact of the alienations. What I am worried about is their immensity and the fact that the work to be done will not be commensurate with the areas held. I do not suggest for one moment that if an area is being explored it should not be alienated. But the Minister perhaps has lost his sense of proportion and does not realise how much money is involved in even the most superficial examination of an area of the kind that we are talking about in relation to these offshore oil exploration permits. The situation that I see in this will lead to an amendment that I hope later to put before the Committee. At the present stage, let me just say that there is no provision in the Bill setting out the minimum of the working conditions or providing for the publication of the working conditions. So what is done will be done in a hole and corner way and nobody will ever know what is done. Looking at the past and at what is proposed - I am speaking not of production licences but of exploration permits - the sums proposed to be spent amount to probably not more than 1% of what is needed. A block held under permit for exploration, as a worthwhile exploration project, certainly needs not less than $lm spent on it over 6 years. If a permit is to be given for a gigantic area . of 400 blocks, there should be a requirement for the expenditure of not less than $400m over 6 years if the fair thing is to be done. If companies are not prepard to come up to this scale of expenditure, they should reduce the size of their permit areas and let somebody else in.


Mr Graham - Did the honourable member give a figure of $400m?


Mr WENTWORTH - I did, and I meant it. We are giving away these immense areas. In this matter, we in this place seem to have lost all sense of proportion. A block has an area of 25 square miles. The permit holder has to go over it perhaps with marine seismic surveys or aeromagnetic surveys. The first hole put down on the block will cost something like $lm.


Mr Buchanan - Half that.


Mr WENTWORTH - It will cost something Like $lm, though the figure varies. It may be a quarter of a million dollars or it may be $2m. The sum of $lm is not bad for 50 days drilling for the first exploration hole. A block of 25 square miles is in itself a big area. If we look at a block of this size on the map we see that we have lost our sense of proportion. We are giving away immense areas which cannot possibly be explored with the kind of money that the companies can put up. I do not believe that any company is going to put up this kind of money. Therefore, a company is not entitled to monopolise a big area and keep other people out. I make this reservation, that in the first couple of years while the framework is being laid down and the major basins are being determined, there may be a reason for giving a company a big area and saying: 'Look, over this big area you will have to spend a little bit*. However, when we come down to monopoly for exploration - and I have looked at what is happening in other parts of the world - a company should be required, over the 6 years that it holds a block, to spend not less than Sim. If it holds a permit area of 400 blocks, in order to retain it a company should be required to spend $400m. No company is going to do this, so the companies should concentrate on smaller areas and leave other exploration permits open for other people. They should not act like a dog in the manger. This is a Bill to allow big companies to act like a dog in the manger with exploration permits and prevent other companies coming in and producing oil.

The Bill will help to limit oil exploration in Australia although it will give us something over the short term. The mess of pottage is here. I have no doubt, if the

Bill is passed, that there will 'be a splurge about somebody coming in with $3 Om, $40m or $100m. That will sound big, but it is really only peanuts. It is the kind of garnishing put on to make this kind of intolerable Bill acceptable. What we want is exploration, and we want it quickly. If a company is prepared to spend an adequate amount on its permit area then it should have the permit area. I have to qualify what I have said, because there have been commitments entered into and even though these may have been entered into illegally I feel there is a case for honouring them. I am not proposing to suggest we dishonour our past commitments.


Mr Arthur - Surely not 'illegally'?


Mr WENTWORTH - Yes. Arrangements were made illegally by the States. 'Illegal' is the correct word. They were made without legal basis. I still feel, however, that we should honour them. I am therefore not proposing that we should invalidate these commitments. What 1 am proposing is something a great deal, more favourable to the companies concerned, namely, that we should not give them an automatic right of renewal unless they have spent an adequate amount in the 6 years of their permit. I do not see how anybody could object to this. It meets all the obligations which we have undertaken to the States in respect of these overseas companies. It gives them a free go for 6 years. If they can turn up things in 6 years, good luck to them. But at the end of this period let other people come in, not only into worthless areas which they will be able to discard after 6 years but into good areas that have some prospects. Do not let us try to give a monopoly of the whole of the Australian offshore oil in good areas to people whose financial interest it is to produce only a limited quantity of oil.

I do not want to blame the overseas companies. They and their directors have a duty to maximise their profits. That is what they are there for and if the directors of the companies acted in any other way they would be false to their trust. They have to maximise their profits. With the over-production of oil in the world at the moment the big overseas companies do not want large extra quantities of oil put on the world market. It is not proved; but it is probable that in Australia we have off shore oilfields which will be capable not only of supplying our local demands but the demands of the Far East in competition with the oil which is owned elsewhere by these companies and of which there is a surplus at present. It is to their advantage that Australian exploration should not proceed too quickly. They want to let it proceed to a certain extent. They want to do as much as will enable them to hold their leases and to keep other people out. Do not let us, as a Government, be entirely neglectful of the interests of Australia. Our interests are to get as much oil as possible, and to get it quickly.







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