Petroleum Excise (Prices) Regulations (Amendment) 1991 No. 299
EXPLANATORY STATEMENT
STATUTORY RULES 1991 No. 299
Issued by the Authority of the Minister of State for Resources
PETROLEUM EXCISE (PRICES) ACT 1987
PETROLEUM EXCISE (PRICES) REGULATIONS (AMENDMENT)
Section 14 of the Petroleum Excise (Prices) Act 1987 (the Act) provides that the Governor-General may make regulations for the purposes of the Act.
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. Subsequent changes to the Regulations allow oil producing regions to be added to the Schedule with individual commencement dates.
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.
During 1991 it became apparent that production from the Saladin oil producing region was approaching the 4767.3 megalitres (30 million barrel) excise exempt limit prescribed in the Excise Tariff Act 1921. As a result the Regulations would need to be amended to include the Saladin oil producing region in the Schedule of the Regulations so that a separate VOLWARE price could be determined for the region. Because the actual date on which cumulative production exceeds the 4767.3 megalitres (30 million barrel) excise exempt limit prescribed in the Excise Tariff Art 1921 is not known precisely, it is proposed that the date of commencement be the date of the gazettal of the amendment to the Regulations.
Overview
The Petroleum Excise (Prices) Regulations (Amendment) 1991 No. 299, issued under the authority of the Minister of State for Resources, was enacted to address the need for a more inclusive calculation of petroleum excise prices that reflect regional differences in crude oil production. This amendment to the Petroleum Excise (Prices) Act 1987 aimed to ensure that the volume weighted average realised (VOLWARE) price for petroleum, which is used as the basis for determining excise payable under the Excise Tariff Act 1921, could be accurately calculated for both offshore and onshore regions. The policy objective was to prevent inequities in excise liability by acknowledging that realised prices of crude oil from different sources can differ significantly, thus impacting the relative excise burden on producers. This amendment was particularly significant as it extended the application of the Act to include the Saladin oil producing region, responding to the emerging production trends that were approaching the 4767.3 megalitres (30 million barrel) excise exempt limit.
Scope and Application
The Petroleum Excise (Prices) Regulations (Amendment) 1991 No. 299 applies to the calculation of a volume weighted average realised price (VOLWARE) 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 amendments have expanded its application to onshore regions producing excisable petroleum to ensure equitable excise liabilities across different producing regions. The Amendment Act of 1990 and subsequent changes to the Regulations allow new oil producing regions to be added to the Schedule, with individual commencement dates determined based on the date of gazettal of the amendment. The purpose of these regulations is to prevent inequities in excise liability that could arise from differing realised prices of crude oil from different sources.
Key Provisions
The Petroleum Excise (Prices) Regulations (Amendment) 1991 No. 299, issued under the Petroleum Excise (Prices) Act 1987, primarily serve to amend the existing regulations to include the Saladin oil producing region in the schedule. This amendment is necessary to determine a separate volume weighted average realised (VOLWARE) price for petroleum produced in this region, thereby preventing any inequities in excise liability that might arise due to differing realised prices from various sources. Specifically, Section 14 of the Act empowers the Governor-General to make these regulations to achieve the objective of the Act.
These regulations impose obligations on entities producing excisable petroleum, particularly in the Saladin region, to ensure that their production is accurately reported and that the VOLWARE price is correctly calculated for excise purposes. Producers must comply with the new schedule by providing data and information required by the regulations to facilitate the determination of the VOLWARE price for their region. Failure to comply with these obligations could result in inaccuracies in the excise liability, potentially leading to financial discrepancies and legal consequences.
Breaching the obligations imposed by these regulations could lead to serious consequences. While the regulations themselves do not explicitly detail offences or penalties, the underlying Petroleum Excise (Prices) Act 1987 and the Excise Tariff Act 1921 provide the framework within which breaches are addressed. For instance, under the Excise Tariff Act 1921, non-compliance with excise obligations can result in civil penalties, including fines and potential criminal charges for more severe breaches. The precise penalties depend on the nature and severity of the breach but can include substantial financial penalties and, in some cases, imprisonment. Therefore, it is crucial for entities producing excisable petroleum to adhere strictly to the reporting and calculation requirements set forth by these regulations to avoid potential legal repercussions.