Petroleum Excise (Prices) Regulations (Amendment) 1992 No. 410
EXPLANATORY STATEMENT
STATUTORY RULES 1992 No. 410
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 (that is, a VOLWARE) price for crude petroleum oil, which is used as the basis for determining excise payable under the Excise Tariff Act 1921.
The Act was initially confined to the Bass Strait producing region as this was the only region offshore producing excisable petroleum. The Act was subsequently 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 this change 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 Amendment Act defined 'oil producing region' to mean one or more production areas within the meaning of the Excise Tariff Act 1921 from which stabilised crude petroleum oil is obtained, being the area or the areas that are together prescribed by the Regulations as an oil producing region. The Amendment Act also defined 'VOLWARE commencement date' in relation to excisable crude petroleum oil obtained from an oil producing region as the date after which final VOLWARE prices and interim VOLWARE prices for each month are calculated in relation to that oil, not being a date earlier than 31 December 1987.
The calculation of separate VOLWARE prices for different producing regions is necessary to prevent inequities in excise collection. These inequities arise from the fact that the realised prices of crude oil from different regions 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 excise than those with higher realised prices if a combined VOLWARE price were used as the basis for determining excise liability.
It has become apparent during 1992 that production from the Harriet/Lenita oil producing region is approaching the 4767.3 megalitres (30 million barrels) excise exempt limit prescribed in the Excise Tariff Act 1921. As a result the Regulations require amendment to include the Harriet/Lenita oil producing region in the Schedule to the Regulations so that a separate VOLWARE price can be determined for the region.
The calculation of a monthly VOLWARE reference price uses the price of Oman and Dubai crude oil to reflect movements in the oil market. These prices are currently sourced from the Platt's Oilgram Price Report. However, a significantly less costly data source is now available. In order to take advantage of the savings the Regulations need to be amended by deleting 'Platt's Oilgram Price Report' and inserting 'Reuters Database Services'.
The first part of the amendment would insert Reuters Database Services as the source of prices for Oman and Dubai crude oil used to determine the reference price. The commencement date would be 1 February 1993. The second part of the proposed amendment to the Regulations inserts Harriet/Lenita in the Schedule. As the actual date on which cumulative production will exceed the excise exempt limit is not known precisely, it is proposed that the date of commencement be the date of gazettal of the amendment to the Regulations.
Overview
The Petroleum Excise (Prices) Regulations (Amendment) 1992 No. 410 amends the Petroleum Excise (Prices) Regulations under the authority granted by Section 14 of the Petroleum Excise (Prices) Act 1987. The primary objective of this amendment is to address the emerging need for calculating a separate volume weighted average realised (VOLWARE) price for the Harriet/Lenita oil producing region, in order to avoid inequities in excise collection. This arises from the observed differences in realised prices of crude oil from various regions, which have direct implications for excise payable. Additionally, the amendment seeks to introduce cost savings by changing the data source for Oman and Dubai crude oil prices from Platt's Oilgram Price Report to Reuters Database Services, effective from 1 February 1993. This amendment was issued by the Minister of State for Resources, reflecting a policy objective to ensure fair and efficient excise collection mechanisms in the petroleum industry.
Scope and Application
The Petroleum Excise (Prices) Regulations (Amendment) 1992 pertains to the determination of a volume weighted average realised price (VOLWARE) for crude petroleum oil, which is integral to calculating the excise payable under the Excise Tariff Act 1921. The Act applies to all oil producing regions within Australia, both offshore and onshore, and its geographic reach encompasses the entirety of the Commonwealth. The amendment to the Regulations aims to refine the scope of the legislation by including the Harriet/Lenita oil producing region in the Schedule, thereby facilitating the calculation of a separate VOLWARE price for this region. This amendment is crucial to prevent inequities in excise collection as the realised prices of crude oil from different regions can vary significantly. The Regulations have been updated to reflect more cost-effective data sources for the reference prices, switching from Platt's Oilgram Price Report to Reuters Database Services, effective from 1 February 1993. The inclusion of the Harriet/Lenita region in the Schedule is proposed to commence from the date of gazettal of the amendment. This ensures that once the cumulative production of this region reaches the excise exempt limit, a specific VOLWARE price can be accurately calculated and applied.
Key Provisions
The Petroleum Excise (Prices) Regulations (Amendment) 1992 No. 410 introduces several significant amendments to the Petroleum Excise (Prices) Regulations under the Petroleum Excise (Prices) Act 1987. Primarily, section 14 of the Act authorises the Governor-General to make regulations for the purposes of the Act, which in this case involves setting a volume weighted average realised (VOLWARE) price for crude petroleum oil. This price is crucial as it determines the excise payable under the Excise Tariff Act 1921. The Amendment Act expands the application of the Act to include onshore regions producing excisable petroleum, ensuring a more comprehensive approach to determining excise liability.
Under these Regulations, one of the key changes is the introduction of the Harriet/Lenita oil producing region into the Schedule of the Regulations. This amendment is necessary to calculate a separate VOLWARE price for this region, thus preventing any inequities in excise collection. The inclusion of this region is timely as production from Harriet/Lenita is nearing the 4767.3 megalitres (30 million barrels) excise exempt limit set out in the Excise Tariff Act 1921. This change will ensure that the VOLWARE price remains accurate and reflective of the specific market conditions for this region.
Furthermore, the Regulations are amended to update the source of price data for Oman and Dubai crude oil, which are used to determine the reference price. The amendment replaces 'Platt's Oilgram Price Report' with 'Reuters Database Services' as the source of this data. This change is intended to take advantage of a more cost-effective data source, which will help in reducing operational costs without compromising the accuracy of the price data. The commencement date for this change is set for 1 February 1993.
Compliance with these Regulations is essential for all parties involved in the production and taxation of crude petroleum oil. Producers must ensure that their operations are aligned with the new VOLWARE price calculations for the Harriet/Lenita region, and they must use the specified data source for determining reference prices. Failure to comply with these amendments could result in incorrect excise calculations, leading to potential financial liabilities or legal repercussions. The Regulations clearly outline the necessary steps and timelines for compliance, ensuring that all parties understand their obligations.
The Petroleum Excise (Prices) Regulations (Amendment) 1992 No. 410 also outlines the consequences for non-compliance. While specific offences and penalties are not detailed within the text, non-compliance with regulatory requirements under the Petroleum Excise (Prices) Act 1987 could potentially lead to civil or criminal penalties as prescribed by other relevant legislation. These penalties may include fines or other sanctions, the specifics of which would be determined based on the nature and severity of the breach. Adherence to the Regulations is therefore crucial to avoid any adverse legal or financial consequences.