LEGAL AND TAXATION IMPLICATIONS FOR THE ACQUISITION AND DISPOSAL OF OFFSHORE PETROLEUM PRODUCTION AND EXPLORATION TENEMENTS—A PRACTICAL VIEW AND UPDATE

Abstract

The administrative aspects of petroleum mining and exploration companies have become more complex of recent years. One area where this is particularly so is in relation to the livelihood of the industry, i.e. access to tenements.

While exploration and development activity onshore has hotted up in particular, offshore activity has been fervent but limited largely to bringing into production fields on the North West Shelf, at Jabiru and new areas in Bass Strait. Generally it is held that the likelihood for discoveries of large fields will be offshore Australia rather than onshore and that present exploration activities offshore are inadequate to maintain Australia's oil self-sufficiency.

Recent amendments to the Petroleum (Submerged Lands) Act, a plethora of associated Acts, and proposed new tax imposts (e.g. cash bonus bids, retention licence fees, resource rent tax, and capital gains tax) in relation to the offshore segment of the industry have added significantly to the complexities in planning the acquisition and disposal and ongoing control of tenements. Each of these is examined individually and in conjunction for the benefit of planners and executives administering tenements within their organisations.

Both sides of the transaction are viewed with emphasis on their tax positions providing opportunities to control the directions and funding mechanisms for the transaction.