Petroleum Royalties

Petroleum royalties are levied on petroleum production onshore, within coastal waters and the North West Shelf Project. Total petroleum royalties collected in 2007-08 amounted to A$1.25 billion. 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:

• wellhead;
• 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.

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Royalty payments can now be made online by direct debit or credit card (up to $10,000) using Royalties Online.

This system also allows the preparation and lodgement of royalty calculation returns to be completed online.

Alternatively, payment may be made by cheque made payable to "Industry and Resources" and mailed to Mineral House, 100 Plain Street EAST PERTH 6004.

Royalty payments (excluding Barrow Island RRR payments) may also be paid via electronic funds transfer to the Department of Mines and Petroleum (DMP) account with the Commonwealth Bank (251 St Georges Terrace, Perth).  The DMP account number is 066-040 12000048.

Also, Barrow Island RRR payments may be paid via electronic funds transfer to the Department of Mines and Petroleum (DMP) account with the Commonwealth Bank (251 St Georges Terrace, Perth).  The DMP account number is 066-040 12000013.

At the same time, please ensure that your financial institution states whom payment is made on behalf of and that it is a royalty payment and forward a remittance advice regarding the royalty amount being paid by fax +61 8 9222 3838 or e-mail.

Royalty calculation returns must arrive at DMP's Mineral House office prior to payment.

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There are five Acts that apply in Western Australia:

• The Offshore Petroleum (Royalty) 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 1982 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.

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