A federal government report released today has recommended the establishment of a national offshore petroleum industry regulator to streamline the approval process for oil and gas projects.
A federal government report released today has recommended the establishment of a national offshore petroleum industry regulator to streamline the approval process for oil and gas projects.
The Productivity Commission's Review of Regulatory Burden on the Upstream Petroleum Sector Report examined Australia's regulatory framework for oil and gas projects which are operated at two or more locations.
The commission recommended a suite of reforms, including a national petroleum regulator, the use of statutory timelines and improved reporting of performance to reduce regulator burdens.
According to the report, current regulations are overly complex and often overlap, potentially diminishing the present value of petroleum resource extraction in Australia by billions of dollars each year.
PC Commissioner Philip Wieckhard said cutting the time taken to approve major projects by 50 per cent was not only desirable but achievable.
The national petroleum regulator would require states and territories to opt into the system, rather than be stripped of their regulatory rights.
But the state government may not approve the proposal, when the concept was floated as a draft last year resources minister Norman Moore said the WA government would oppose a national takeover.
Western Australia is home to several large proposed liquefied natural gas projects, which could provide billions of dollars of gains to the community if regulatory burdens were reduced, according to the report.
Western Australian Premier Colin Barnett said streamlining the approvals process was a priority of his government while addressing an industry function last week.
Origin Energy and Woodside Petroleum has offered its support to the concept of a federal regulator.
Key points from the report are listed below:
Key points
- Oil and gas projects are large and complex. From the community's perspective, it is important that they meet reasonable requirements for the environment, heritage, land access, and occupational health and safety. It is also important to achieve these objectives without imposing unnecessary costs on companies or the broader community.
- Currently, duplication and overlap, and inconsistent administration of the 22 petroleum and pipeline laws and more than 150 statutes governing upstream petroleum activities impose significant unnecessary burdens on the sector.
- Project approvals are taking longer than a streamlined approval process would allow, potentially diminishing the present value of petroleum resource extraction in Australia by billions of dollars each year.
- There is no simple, single answer to reducing the unnecessary regulatory burdens on the upstream petroleum sector. A suite of changes will be needed.
The Commission's proposals fall into two broad groups: implementing regulatory best practice and reforming institutional arrangements.
- Key recommendations for improving existing regulatory arrangements include:
- reducing unnecessary delays (particularly for environmental and heritage processes) through setting statutory timelines, ensuring legislative objectives are clear, promoting clear guidelines on information requirements, and introducing a 'lead agency' approach for approvals
- clarifying and clearly articulating the objectives for intervention in resource management and ensuring the costs of intervention are the minimum necessary.
- To cut through regulatory duplication and overlap, the Commission proposes the staged establishment of a new national offshore petroleum regulator to undertake resource management, pipeline and environmental regulation in all Commonwealth, State and Territory waters (including islands).
- The Australian Government initially would establish the new national offshore petroleum regulator in Commonwealth waters, and then provide State and Territory Governments, on a bilateral basis, the option of conferring their petroleum regulatory responsibilities. States and Territories would also have the option of conferring responsibility for regulating cross-jurisdictional onshore pipelines to this body.
- The National Offshore Petroleum Safety Authority should remain a separate entity with an exclusive focus on occupational health and safety regulation, with its remit extended to offshore pipelines, subsea equipment and wells. Its geographical coverage should include all Commonwealth, State and Territory waters (including islands).
Many of the recommendations for 'best practice' regulation in this report repeat recommendations made by previous, yet for the most part, unimplemented, reviews.
This simply reinforces that strong political will and leadership will be essential if meaningful improvement in the way this sector is regulated across multiple jurisdictions is to be successfully implemented, and sustained.
