PERTH (miningweekly.com) – Queensland on Monday announced a new gas royalty regime which should assist in providing investor certainty and help ongoing investment in the state.

Treasurer and Minister for Infrastructure and Planning Cameron Dick said that the new volume-based model would support affordable supply for domestic customers, appropriate returns for Queenslanders and fairness for gas producers.

The volume-based model will see royalties calculated on the volume of gas produced and will include a sliding rate scale and producers’ sales revenue.

“Queensland’s gas industry continues to do the heavy lifting in supplying the gas for domestic markets in Eastern states, while also meeting the needs of international customers.

“This review has been crucial in ensuring that oil and gas companies are treated fairly, and that Queenslanders receive their fair share of royalties from this important industry. The model is transparent, equitable, administratively simpler and locked in for five years.

“Importantly, the new model supports the government’s commitment to create more jobs in more industries.

“The royalty rates are also locked in for five years to provide certainty for producers.”

The review, undertaken by a working group independently chaired by former South Australian Premier Jay Weatherill, examined different royalty models.

Weatherill concluded that the current royalty regime was not suitable for the existing configuration of the Queensland gas industry and recommended that a volume-based model be adopted.

The Australian Petroleum Production and Exploration Association (Appea) on Monday said that clarity on the government’s policy position was important as the industry considered the next round of investment in developing the state’s substantial natural gas resources.

The decision helps to provide a level of certainty to the industry which stands ready to contribute strongly to Queensland’s recovery from the sharp economic downturn wrought by the Covid-19 pandemic,” Appea CEO Andrew McConville said.

“Now is not the time for continued confusion or ongoing debate about the economic framework for investing in Queensland. Predictable regulation is the foundation for investment in the new gas supplies which are urgently needed in the east coast gas market.

“Today’s announcement providing clarity on the royalty regime moving forward is a step towards helping the development of future gas supplies.”

The Queensland Resources Council (QRC) has called on the state government to commit to a ten-year freeze on all resource royalties, with CEO Ian Macfarlane saying stable royalties provided greater investment and employment certainty for the resources industry.

“The resources sector has been paying more than $5-billion in royalties to the Queensland government to reinvest in services and infrastructure for all Queenslanders.

“The role of the resources sector is even more important to Queensland with Covid-19’s impact across the state’s economy. The resources sector employs one in seven jobs in Queensland and it contributes more than A$220-million to the state’s economy each week.

“The last royalty increase in 2012 compounded the regional impact of a global downturn in commodity prices and led to a significant reduction in resource investment and jobs.

“QRC welcomes the use of actual sales rather than an index for calculating gas royalties and the lower rates the model will offer for domestic production.”