Review of Regulatory Burden on the Upstream Petroleum (Oil and Gas) Sector

Abstract

In 2008, the Council of Australian Governments (COAG) identified the upstream petroleum (oil and gas) sector as one of many ‘hotspot’ areas where overlapping and inconsistent regulation threatens to impede economic activity, and agreed that the Productivity Commission should undertake a review of the regulatory burden within the sector. The Commission’s report, released in April 2009, recommends measures to reduce unnecessary regulatory burdens on the upstream oil and gas sector. It considers that these burdens can be removed without compromising policy objectives in areas such as resource management, the environment, heritage, development, land access and occupational health and safety.

Oil and gas projects are large and complex, giving rise to unique and substantial environmental and other issues. In addition, most projects span multiple jurisdictions, adding a further layer of complexity. According to the Commission’s report, duplication, overlap and inconsistent administration of the 22 petroleum and pipeline laws and more than 150 statutes governing upstream petroleum activities, impose significant unnecessary burdens on the sector. Undue delays in the project approval process are potentially diminishing the present value of petroleum resource extraction in Australia by billions of dollars each year.

There is no simple, single answer to the problem of unnecessary regulatory burden in the upstream petroleum sector. The Commission proposes a suite of changes, falling into two broad groups: implementing regulatory best practice and reforming institutional arrangements

Keywords: oil exploration, petroleum exploration, gas, energy supply