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All petroleum and other regulated resources (contained onshore) in South Australia are subject to the provisions as specified in the Petroleum and Geothermal Energy Act 2000 (the Act) and the Petroleum and Geothermal Energy Regulations 2013 (the Regulations).
Section 43 of the Act provides details of obligations relating to royalty, including royalty rates, allowable deductions and timing of royalty payments and returns.
Summary of royalty provisions
Royalty is payable at the rate of 10% of the net post-wellhead sales value (wellhead value) of the regulated substance (e.g. crude oil, propane) recovered at the wellhead. Substances recovered from underground coal gasification wells are considered to be regulated substances.
Wellhead means the casing heads and includes the casing hanger or spool, or tubing hanger, and any flow control equipment up to and including the wing valves.
The wellhead value of a regulated substance recovered is calculated by deducting certain post-wellhead costs (exclusive of GST) from the arms-length gross sales values obtained, or that could be reasonably be realised, on the sale of the substance to a genuine purchaser at arms length.
Post-wellhead costs include operating and certain capital expenses directly relating to treating, processing and refining regulated substances after the wellhead, and expenses incurred conveying those regulated substances to the point of delivery to the purchaser.
Pre-wellhead costs such as those incurred in exploration, drilling or recovery activities are not relevant to the calculation of royalty.
The value at the wellhead of a regulated substance or geothermal energy is to be assessed by the Minister. The Minister may, on application by the producer, or on the Minister's own initiative, review and revise an earlier assessment of the value at the wellhead of a regulated substance or geothermal energy.
Royalty on geothermal energy is 2.5% of the wellhead value of the geothermal energy. The value at the wellhead is calculated by subtracting from the sales value, costs reasonably incurred by the producer in getting the energy to the point of delivery to the purchaser (exclusive of GST).
Lodgement of royalty returns - PReL
Royalty returns are required to be submitted within 30 days after the end of each month in which a regulated substance or geothermal energy is produced.
The online system, Petroleum Returns e-Lodgement (PReL) enables the lodgement of petroleum returns required under the Act, taking into account the lodgement requirements imposed by the Guidelines for payment of royalty and provision of information (Royalty Guidelines).
Only entities that are required to submit royalty returns (or that opt to submit returns on behalf of their joint venture partners) are provided access to PReL.
PReL captures the monthly return information required under Section 43(4) of the Act, namely:
- The quantity of the regulated substance or energy produced; and
- The quantity of any regulated substance or energy sold, and the amount realised on sale; and
- Any other information necessary to calculate royalty payable (e.g. deductions and other items covered in the Royalty Guidelines).
Supporting records are required to be attached to each return lodgement, and comments can be added (and in some instances are required) to provide context to returns.
If you experience trouble accessing PReL or are a new producer requiring access, please contact the Resource Royalties Team directly on +61 8 8429 2512 or DEM.Royalty@sa.gov.au
A PReL User Guide is available.
Payment of royalty
Royalty payments can be made by cheque (made payable to the Department for Energy and Mining) or by direct bank transfer to:
|Commonwealth Bank of Australia|
100 King William Street
Adelaide SA 5000
|Account Name:||Department for Energy and Mining - Collections|
|Account Number:||1002 2561|
The Australian Government collects royalties for petroleum and other regulated substances recovered from projects in Commonwealth waters, offshore South Australia.
For further information on taxes and royalties payable in Commonwealth waters, please refer to the Department of Industry, Science, Energy and Resources website.
This information is provided to help you understand the audit process and answer some questions you may have. It also provides you with some details of your rights and obligations during an audit.
Audits are selected in a variety of ways:
- industry trend analysis
- follow-up of information received from a variety of sources
- random selection for the routine verification and coverage of the royalty revenue base
The Resource Royalties Team anticipates that all licensees will be audited at least once every 2 years.
In most cases an auditor will:
- write, telephone or visit you to let you know that an audit will be conducted
- explain the process and the scope of the audit
- specify the records to be produced
- give you reasonable time to assemble those records and to submit electronically or arrange a time and place to interview you or a representative and review records
- confirm arrangements in writing
Field audits will be conducted by Authorised Officers appointed pursuant to the Petroleum and Geothermal Energy Act 2000.
During an audit, the auditor will conduct interviews and make enquiries to establish compliance with the particular legislation and examine and test some of your internal financial records.
You will receive written advice of the outcome of the audit and any proposed action.
You should ensure that the records the auditor has requested are ready for examination. If you require further time to collate the records, please inform the auditor prior to the commencement of the audit.
How long an audit takes depends to a large extent on what type of audit - full audit, interim audit, themed audit or spot check - is undertaken.
If you have any questions about the arrangements for the audit or the processes involved, contact the auditor for assistance.
Auditor's have a range of powers. In general, these powers permit the auditor to:
- gain access to buildings and property and remain there
- inspect, examine and copy any documents or records
- require a person to answer questions and provide information
- require a person to take reasonable steps to obtain information relevant to the audit and to pass it on to the auditor
If a licensee fails to comply with an auditor's lawful requests, it is possible that penalties such as a fine can be applied.
During an audit, you are obliged to provide:
- the auditor reasonable assistance and facilities
- complete and honest answers and explanations to questions
- Prompt, full and free access to all relevant information, records, documents, data and systems as required.
If an audit is to be conducted, you have the right to:
- ask for reasonable time to produce your records
- negotiate the time and place for the audit with the auditor
- receive written confirmation of these arrangements
During an audit, you have the right to:
- sight the auditor's identification and authority
- expect the auditor to be professional and courteous
- involve your professional representative in the process
- ask how long the audit is likely to take
- expect your affairs to be treated with strict confidentiality
- be given the opportunity to explain the reasons for any irregularities, discrepancies, decisions etc.
At the end of the audit, you have the right to:
- receive an explanation of the results or findings
- ask the auditor how an assessment of royalty payable has been applied
- ask for advice about the objection and appeal process
- discuss any aspect of your case with the auditor and/or their manager
If you are dissatisfied with certain decisions or an assessment of the value at the wellhead of a regulated substance or geothermal energy you are entitled to appeal against the assessment to the Land and Valuation Court.
Information gathered during an audit is treated in the strictest confidence and will not be used or divulged except for purposes required by law.