Petroleum royalties are administered and collected under State and Commonwealth legislation.
Royalties collected for onshore projects are retained by the State Government, while offshore royalties are shared between the State and Commonwealth in accordance with the relevant legislation.
Understanding Petroleum Royalties
Petroleum royalties are levied on petroleum production onshore, within coastal waters and the North West Shelf Project. Total petroleum royalties collected last year amounted to A$955 million. The rate of royalty is normally set at between 10–12.5% of the wellhead value of petroleum produced.
In addition to State royalties, Commonwealth legislation provides for an excise on all oil and condensate produced from fields of greater than 4.8 GL (30 MMbbl). The first 4.8 GL (30 MMbbl) is excise exempt. Currently there are no onshore fields which are large enough to pay these taxes.
Generally, there are three systems used for the collection of petroleum royalties:
- resource rent royalty;
- and petroleum resource rent tax.
Petroleum royalties are administered and collected under State and Commonwealth legislation. Royalties collected for onshore projects are retained by the State government, while offshore projects are shared between the State and Commonwealth in accordance with the relevant legislation.
Barrow Island onshore royalties are also shared between the Commonwealth and the State.
Payment and Lodgement
Royalty returns can be lodged online if you are an existing Royalties Online customer. Set up an account now: Royalties Online Client Regstration.
The Department accepts royalty payments by Electronic Funds Transfer (EFT). All EFT royalty payments must be made within the prescribed time to the Department’s account.
For Royalties other than Barrow Island RRR
Bank: Commonwealth Bank of Australia
For Barrow Island RRR / Penalties
Bank: Commonwealth Bank of Australia
Please include Payer details and Payer Reference Code on your EFT transaction so that the Department can allocate your payment to the correct project/s.
Royalties are to be remitted on the last working day of the next succeeding royalty period. If this date falls during the weekend or on a public holiday, payment should be made on the preceding working day.
Late Payment Penalty
An additional amount must be paid if payment is not made by the due date stipulated above. The additional amount is calculated from the time that the royalty became payable until it is paid.
There are five Acts that apply in Western Australia:
- The Offshore Petroleum and Greenhouse Gas Storage Act 2006, which covers production from fields originating from the North West Shelf project areas covered by permits WA-1-P and WA-28-P. This is an area of Commonwealth jurisdiction in which a wellhead value royalty system is used.
- The Petroleum (Submerged Lands) Act 1982 which covers fields within a defined coastal waters area, generally being 3 nautical miles seaward from the baseline, as well as certain ‘subsisting’ permit areas located within State inland waters. The State administers a wellhead value royalty system.
- The Petroleum Resources Rent Tax Assessment Act 1987 applies to all offshore waters seaward of the outer limit of coastal waters other than the North West Shelf project Area. The Commonwealth administers a resource rent tax, which is effectively a profit-based tax levied on a project. It replaced a wellhead royalty and excise system.
- The Petroleum and Geothermal Energy Resources Act 1967 applies to onshore areas and waters landward of the baseline of the coastal waters, other than ‘subsisting’ permit areas under the Petroleum (Submerged Lands) Act 1982. The State administers a wellhead value royalty system.
- The Barrow Island Royalty Variation Agreement Act 1985 applies only to Barrow Island. The royalty regime was developed in negotiations between the WAPET consortium, the State and the Commonwealth. It replaced the wellhead royalty and excise system that had previously applied.