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Focus: Resources – April 2008

Reducing regulatory duplication in upstream oil and gas sector

In brief: The Australia 2020 Summit findings on regulatory reform are particularly timely for the upstream oil and gas sector, with the Council of Australian Governments having recently asked the Productivity Commission to undertake a review of the regulatory burden on the upstream petroleum sector in Australia. Partner Darren Murphy (view CV) and Law Graduate Nikki van der Meer look at the background and significance of the Productivity Commission's review.

• Australia 2020 Summit 'Top Ideas'
• COAG regulatory reform
• Productivity Commission terms of reference
• Case study comparison: Gas Access Regime review
• Your ability to participate

How does it affect you? The Productivity Commission will be seeking submissions for its review of the regulatory burden on the upstream oil and gas industry. The review is a significant step towards the streamlining of regulatory processes and the removal of duplication between jurisdictions.

Australia 2020 Summit 'Top Ideas'

Over the weekend of 19 and 20 April 2008, the Australia 2020 Summit brought together 1000 leading Australians to debate and develop long-term options for the nation across 10 subject streams, including the future of the Australian economy. A number of 'Top Ideas' (key messages generated over the course of the summit) were presented as part of the summation and will form the basis of a report to be delivered to the Federal Government.

One 'Top Idea' that emerged from the Summit was 'regulation reform to reduce regulation overlaps and complexity and to incentivise timely investment in infrastructure'. In particular, increasing the speed of regulatory reform was highlighted, with the aim of creating seamless national markets in key areas, improving productivity, removing barriers to competitiveness and reducing the cost of doing business.

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COAG regulatory reform

The Council of Australian Governments (COAG), at its meeting on 26 March 2008, endorsed a broad reform agenda for reducing the costs of regulation and enhancing productivity and workforce mobility in areas of shared Commonwealth and state responsibility. This included a new regulation reform agenda covering nine areas, one of which is upstream petroleum (oil and gas) regulation. COAG resolved that the Productivity Commission undertake a review of the regulation of cross-jurisdictional crude oil and natural gas projects and report back by April 2009.

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Productivity Commission terms of reference

Following the March COAG meeting, terms of reference for a 'Review of [the] Regulatory Burden on the Upstream Petroleum (Oil and Gas) Sector' have now been delivered to the Productivity Commission.

The review will consider Australia's framework for upstream petroleum regulation and consider opportunities for streamlining regulatory approvals, providing clear timeframes and removing duplication between jurisdictions, for cross-jurisdictional petroleum projects.

In undertaking the study, the Commission is to:

• assess the impact of the current regulatory framework on the international competitiveness and economic performance of Australia's petroleum sector and on the performance of the entire economy;
• report on regulatory impediments to improved performance, including inconsistencies and duplication across jurisdictions; and
• consider options for a national regulatory authority to manage all regulatory approvals for the upstream petroleum industry.

The Commission will be seeking public submissions, as well as consulting with business, government agencies and other interested parties, and is to report within 12 months of commencing the study. The Commission's report will then be published and submitted to all Australian governments for consideration.

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Case study comparison: Gas Access Regime review

To understand how this review might progress, it is useful to consider the progress of the Productivity Commission's review of the Gas Access Regime, which is a separate review at a significantly more advanced state.

In that case, many of the Productivity Commission's key recommendations were supported by the Ministerial Council on Energy and subsequently incorporated into the Exposure Draft of the National Gas Law and National Gas Rules, which are set to replace the current Gas Pipeline Access legislation and the Third Party Access Code for National Gas Pipelines. This highlights the significance of the Productivity Commission's upcoming review on upstream oil and gas regulation, and the potential impact of public and industry submissions.

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Your ability to participate

The Productivity Commission is seeking expressions of interest to participate by way of submissions or public hearing. If you would like assistance in preparing your submissions, or further information about the review and the opportunities and risks it presents for your business, please contact any of the people below.

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For further information, please contact:

Darren Murphy Partner, Perth Ph: +61 8 9488 3768 Darren.Murphy@aar.com.au		Ben Zillmann Partner, Brisbane Ph: +61 7 3334 3538 Ben.Zillmann@aar.com.au
David Maloney Partner, Sydney Ph: +61 2 9230 4724 David.Maloney@aar.com.au		Igor Bogdanich Partner, Melbourne Ph: +61 3 9613 8747 Igor.Bogdanich@aar.com.au
Angus Jones Partner, Perth Ph: +61 8 9488 3709 Angus.Jones@aar.com.au		Gavin MacLaren International Partner, Singapore Ph: +65 6535 6622 Gavin.MacLaren@aar.com.au

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