The Productivity Commission’s report, entitled Review of regulatory burden on the upstream petroleum (oil and gas) sector, recommends that government should improve regulatory practice by reviewing and updating all existing legislation to ensure it is consistent with best practice regulation and good regulatory design.
The review states that this can be done by:
- Ensuring reporting requirements are clear, justified and avoid duplication and overlap with other mandatory reporting requirements.
- Ensuring approval processes are best practice and clearly defined.
- Set timelines for individual regulatory decisions.
In addition, the report proposes the establishment of a new national offshore petroleum regulatory (NOPR) body for projects located in Commonwealth waters.
The regulator, to be an independent statutory authority, would administer exploration permit, production and pipeline licensing. It would also approve production, well construction and drilling, and pipeline consents.
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“Benefits include removal of duplication and delays associated with current joint administered development area arrangements, and consistent regulation across offshore areas, including islands,” states the report.
However, it notes that “The effectiveness and efficiency of the NOPR model is largely dependent on the states and territories agreeing to confer ultimate administrative and decision making responsibilities in their waters on NOPR and the Commonwealth Minister as relevant.”
The Commission says that the Australian Government should provide state and territory governments the option of delegating existing petroleum-related regulatory responsibilities in coastal waters to the new national regulator on a bilateral basis.
In addition, the report recommends that the National Offshore Petroleum and Safety Authority be extended to include the safety and integrity of offshore pipelines, subsea equipment and wells.
Industry response
Industry and government have welcomed the report, stating that it has potential for increasing Australia’s prosperity through a more co-operative and efficient approach to regulation and project approvals.
“We anticipate that the release of this report marks the beginning of a national process of regulatory reform,” said Australian Petroleum Production & Exploration Association Chief Executive Belinda Robinson.
The report was commissioned in April 2008 by the Council of Australian Governments in order to examine the regulatory burden on Australia’s oil and gas industry.
On the report’s release, Commissioner Phillip Weickhardt said “Cutting the time taken to approve major projects by 50 per cent is achievable.”
Ms Robinson noted “Australia currently has over $200 billion worth of oil and gas projects on the drawing board with the potential for creating 60,000 jobs nationwide. Immediate consideration of the recommendations and development of an implementation plan will take us one step closer to transforming project plans into reality.”
In addition, Northern Territory Chief Minister Paul Henderson has expressed his support for the report’s proposal to assign offshore oil and gas approvals to a central Commonwealth body.
Mr Henderson said that the plan made absolute sense. “We’ve got to maximise our competitive advantage, and by harmonising and streamlining regulation for investments, it’s absolutely the right thing to do and has my full support,” he said.
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