NO.035

JOINT PRESS RELEASE – TREASURER AND MINISTER FOR INDUSTRY,

TOURISM AND RESCOURCES

OFFSHORE PETROLEUM EXPLORATION INCENTIVE

The Treasurer and the Minister for Industry, Tourism and Resources announced tonight that the Government will introduce a taxation incentive designed to encourage petroleum exploration in Australia’s remote offshore areas.

The measure allows an immediate uplift to 150 per cent on petroleum resource rent tax (PRRT) deductions for exploration expenditure incurred in designated offshore frontier areas.

The 150 per cent uplift applies to pre-appraisal exploration expenditure in the initial term of the exploration permit granted for a designated area.

Uplifted expenditure will also retain access to the transferability and annual uplift provisions of the PRRT.

Australia has some 40 offshore basins that display signs of petroleum potential, but half remain unexplored due to the cost and high-risk nature of exploration in remote frontier areas.

The measure lowers the cost of petroleum exploration in frontier areas, thereby providing an incentive to explore in Australia’s remote offshore areas and increasing the probability of discovering a new oil province.

The measure applies to the annual offshore acreage releases for 2004 to 2008.

Under the measure, the Minister for Industry, Tourism and Resources may allocate up to 20percent of each year’s offshore petroleum exploration acreage release areas as designated frontier areas.

In particular, designated areas will be more than 100 kilometres from an existing commercialised oil discovery and will not be adjacent to an area designated in the previous year’s acreage release.

The 2004 offshore petroleum exploration areas were announced on 29 March 2004. Further to that announcement, the following areas will be designated as frontier areas for the purpose of this measure:

• T04-5 located off the west coast of Tasmania near Port Davey in

  the Sorell Basin.

• W04-2 and W04-4 located on the deep water frontier areas

  of the Exmouth Plateau, over 400 kilometres west of Karratha.

• W04-15 and W04-16 which begin around 70 kilometres west

  of Shark Bay in the Houtman Sub-basin, part of the Northern Perth Basin.

• NT04-3 located in the eastern Timor Sea about 300 kilometres north

  of Darwin in the Northern Bonaparte Basin.

A map showing the location of these areas is attached.

All of these areas remain open for bidding until 31 March 2005. Detailed information

on all the 2004 acreage release areas is available at

www.industry.gov.au/petexp.

CANBERRA

11 May 2004

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