APPEA: Queensland royalty rise to undermine long-term stability

Image courtesy of APPEA

The Australian Petroleum Production & Exploration Association (APPEA) has voiced its displeasure over Queensland’s 25 percent increase in petroleum royalty rates.

The APPEA said on Tuesday that the royalty rate increase implemented by the Queensland government “threatens ongoing investment in one of the very sectors which can underpin the Queensland Budget over the coming decades.”

Namely, Treasurer Jackie Trad announced an across the board retrospective increase in the petroleum royalty rates from 10 percent to 12.5 percent, effective July 1, on all gas produced in Queensland.

The APPEA added that there was no justification for the arbitrary decision to penalize an industry that invested over $70 billion in Queensland, employs thousands of Queenslanders, and underpinned the state’s domestic gas needs.

Chief executive of the Association Andrew McConville said, “The Treasurer has unfortunately determined to use the blunt instrument of tax increases rather than promoting investment and growth to increase long term revenues.

According to data provided by the APPEA, budget papers forecast that the industry will deliver more than approximately $2.5 billion in royalties to Queensland over the next four years.

Increases in royalty rates, however structured, increase the cost of gas production and undermine the long-term stability that is needed to continue to attract investment in Queensland.

An announcement with no consultation, as we have seen today, will be very carefully reviewed by current and prospective investors,” McConville added.

McConville also stated that production for the domestic market was underwritten by the economies of scale inherent in establishing a liquefied natural gas (LNG) industry, without which, much of Queensland’s gas would remain in the ground.

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