Calculating petroleum royalty

To calculate your petroleum royalty liability, you first need to establish the source of the petroleum.

Source When royalty liability arises

Petroleum tenure under the Petroleum and Gas (Production and Safety) Act 2004 or the Petroleum Act 1923

The return period in which the petroleum is disposed of

Any other source

The return period in which the petroleum is produced

Petroleum is disposed of when:

  • it is sold
  • ownership is otherwise transferred to another person
  • it is flared or vented
  • it is used.

Royalty rates

The petroleum royalty rate you use to calculate your liability is set out in section 147C of the Petroleum and Gas (Production and Safety) Regulation 2004.

The current royalty rate for petroleum and gas (including oil, condensate, natural gas, LPG and coal seam methane) is 10% of the wellhead value disposed of or produced in the return period.

Wellhead value

The wellhead value of petroleum disposed of or produced in a royalty return period is:

  • the amount that the petroleum could reasonably be expected to realise if it were sold on a commercial basis
  • minus
  • the sum of the following
    • certain expenses for the royalty return period (including depreciation)
    • any applicable negative wellhead value.

Read the royalty ruling on determining petroleum royalty (PGA001) for information on how to calculate wellhead value.

Depreciation arrangements

We will be reviewing the current depreciation arrangements, to reduce compliance costs and ensure that appropriate capital costs may be claimed.

We will adopt the following approach to claims for depreciation until a new model is ready:

  • Except where noted below, we will not review depreciation claims for periods before 11 January 2016.
  • Continue to calculate your depreciation deductions after 11 January 2016 on the same basis as before that date, unless we tell you differently.
  • For any assets you acquire after 11 January 2016, calculate your depreciation deduction on the same basis as for similar assets before that date.
  • We will review any changes you make to the way you calculate your depreciation deductions, and apply penalties if you make adjustments to benefit from these interim arrangements.
  • If we have begun a review of your petroleum royalty liability before 11 January 2016, we will continue to review your depreciation claims. However, we will only make adjustments on a case-by-case basis if appropriate.
  • We will continue to review your claims if we believe that you have engaged in royalty avoidance activities when making depreciation claims for past periods or during these interim arrangements.

Contact

Office of State Revenue

  • Call 1300 300 734 (Australia) or
    +61 7 3227 6044 (overseas)
  • Send an email using our online enquiry form.

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