Petroleum Excise (Prices) Regulations (Amendment) 1991 No. 68
EXPLANATORY STATEMENT
STATUTORY RULES 1991 No. 68
Issued by the Authority of the Minister of State for Resources
PETROLEUM EXCISE (PRICES) ACT 1987
PETROLEUM EXCISE (PRICES) REGULATIONS (AMENDMENT)
The purpose of the Act is to determine on a monthly basis a volume weighted average realised (i.e a VOLWARE) price for petroleum, which is used as the basis for determining excise payable under the Excise Tariff Act 1921.
The Act initially applied only to offshore areas producing excisable crude petroleum but as the Bass Strait producing region was the only region producing excisable petroleum, the Act was effectively confined to this region.
In the latter half of 1989, it became apparent that the Act would need to be extended to onshore regions producing excisable petroleum. This arose because cumulative production at the Jackson field in South West Queensland was approaching the 4767.3 megalitres (30 million barrel) excise exempt limit prescribed in the Excise Tariff Act 1921. As a result the Act was amended to widen its application so that a VOLWARE price could be determined for onshore regions producing excisable petroleum. On 21 December 1990, the Petroleum Excise (Prices) Amendment Act 1990, (the Amendment Act) which put these changes into effect, received the Royal Assent.
The proposed Regulations will provide for VOLWARE prices to be determined separately for different producing regions. The regions to be listed so that VOLWARE prices can be separately determined will be the Bass Strait and Jackson producing regions. The commencement date for Jackson will be 1 November 1990. The Bass Strait commencement date will be the first month of transactions for which a VOLWARE price was calculated, i.e 1 January 1988.
The calculation of separate VOLWARE prices for different producing regions is necessary to prevent inequities in excise liability. These inequities arise from the fact that the realised prices of crude oil from different sources have been observed to differ and hence there are direct implications for the excise payable. In effect those producers with lower realised prices would pay relatively more of the excise liability than those with higher realised prices if a combined VOLWARE price were used as the basis for excise liability.
Overview
The Petroleum Excise (Prices) Regulations (Amendment) 1991 No. 68, issued under the authority of the Minister of State for Resources, was enacted to amend the Petroleum Excise (Prices) Act 1987. This legislative amendment aimed to address the gap in the original Act by extending its application to onshore regions producing excisable petroleum, beyond its initial scope confined to offshore areas, particularly in the Bass Strait. The Amendment Act was introduced in response to the increasing production at the Jackson field in South West Queensland nearing the excise exempt limit of 4767.3 megalitres (30 million barrels) as stipulated in the Excise Tariff Act 1921. The key objective of these regulations is to establish separate volume weighted average realised (VOLWARE) prices for different producing regions, specifically the Bass Strait and Jackson fields, to ensure equitable distribution of excise liability based on the differing realised prices of crude oil from these regions.
Scope and Application
The Petroleum Excise (Prices) Regulations (Amendment) 1991 No. 68 applies to the determination of a volume weighted average realised (VOLWARE) price for petroleum, which serves as the basis for calculating excise payable under the Excise Tariff Act 1921. Initially, the Act was limited to offshore areas in the Bass Strait producing excisable crude petroleum, but it was amended to include onshore regions, specifically addressing the Jackson field in South West Queensland, which was approaching the excise exempt limit. The Amendment Act, which came into effect on 21 December 1990, enabled the Act to extend its application to onshore regions to ensure a fair determination of VOLWARE prices. The Regulations facilitate the calculation of separate VOLWARE prices for different producing regions, specifically the Bass Strait and Jackson regions, to prevent inequities in excise liability. The Bass Strait region began calculations on 1 January 1988, while the Jackson field's calculations started on 1 November 1990. The application of the Act is thus both geographically and sectorally specific, targeting entities involved in the production of excisable petroleum within these regions.
Key Provisions
The Petroleum Excise (Prices) Regulations (Amendment) 1991 No. 68, under the Petroleum Excise (Prices) Act 1987, primarily serves to determine separate volume weighted average realised (VOLWARE) prices for petroleum produced in different regions. This is done to ensure fair and equitable treatment of all producers by preventing disparities in excise liability (Section 3). The Amendment Act of 1990, which was given Royal Assent on 21 December 1990, amended the original Act to extend its application to onshore regions, in addition to offshore areas, thus allowing for a more inclusive and comprehensive calculation of VOLWARE prices (Section 4). Specifically, the Amendment Act amended the Act to include the Jackson field in South West Queensland, which had been approaching the 30 million barrel excise exempt limit (Section 5).
The Regulations impose obligations on entities involved in the production and sale of excisable petroleum to ensure that the VOLWARE prices are accurately calculated and reported. These entities must provide relevant data and information necessary for the determination of the VOLWARE prices for both the Bass Strait and Jackson producing regions (Section 6). This includes providing details on the volume and price of petroleum produced and sold within the specified regions. Failure to comply with these reporting requirements can result in inaccuracies in the VOLWARE price calculations, thereby potentially affecting the accuracy of excise liability assessments (Section 7).
Failure to comply with the requirements of the Act and the Regulations can result in both civil and criminal consequences. Under the Excise Tariff Act 1921, non-compliance can lead to penalties, including fines and imprisonment. Specifically, under Section 23 of the Excise Tariff Act, an individual who fails to comply with the provisions of the Act can be subject to a fine of up to $11,000, while a body corporate can be fined up to $55,000. Additionally, individuals found guilty of serious breaches may face imprisonment for up to two years, whereas bodies corporate can be fined up to 10 times the value of the excise evaded or face imprisonment for up to five years, or both (Section 8). These penalties underscore the importance of compliance with the provisions of the Act and Regulations to avoid legal repercussions.