The respective state governments have noted the challenges faced by the junior exploration sector and have indicated their intentions to support the industry. We summarise the different relief measures and travel restrictions which affect petroleum exploration and retention licences announced by South Australia and Western Australia. The position in Queensland is still under consideration - the relief requested by industry is also summarised in Table 1: Relief for petroleum exploration licences (SA, WA and QLD).
South Australian measures
The Department for Energy and Mining (DEM) has introduced multiple measures aimed at assisting the petroleum exploration sector. The immediate deferral of all annual regulatory fees incurred by exploration licence holders for the tenements they hold is effective as of 1 April 2020, and extends to all invoices dated from 1 April 2020 until 1 October 2020. Payment terms for these invoices now defer payment until 31 December 2020. DEM has not provided any specific relief for work obligations as a result of the pandemic; instead has expanded the scope of allowable expenditures towards minimum Petroleum Retention Licence (PRL) requirements during periods of low oil prices.
Normally, allowable expenditures include only exploratory and appraisal costs. This relief will allow development expansion to be counted to minimum PRL expenditure requirements. The period of low oil prices is likely to last until 31 December 2020 at the earliest, and may extend beyond that point. This is a similar relief measure to that enacted during periods of low oil prices in 2015/2016.
These relief measures are automatic; there is no requirement to apply to DEM. In addition, the Minister retains discretion to attach, remove or extend any further conditions or exemptions to any licence under section 76A of the Petroleum and Geothermal Energy Act 2000 (SA).
Western Australian measures
Western Australia has provided guidance where it considers the impacts on exploration may be grounds on which exemptions from permit rent and work program commitments. Rather than provide blanket relief, permit holders may continue to apply for a variation, suspension or exemption from a work program commitment under the Petroleum and Geothermal Energy Resources Act 1967 (WA) or the Petroleum (Submerged Lands) Act 1982 (WA). Extensions of time may also be given in the case of a suspension or exemption. Permit holders should demonstrate the non-financial impacts of COVID-19 on their work program conditions because the merits of any application will turn on how these reasons are expressed. Applications for purely financial impacts will likely be rejected as will inadequate applications.
It should also be noted that the WA government has indicated strongly that it has no intention to remove its restrictions on interstate travel for some time. Companies will need to review any temporary arrangements to ensure viability over the longer term.
Queensland measures
Queensland is yet to announce relevant relief measures. However, the government has indicated they will not implement blanket relief, and will instead tailor their approach on a case by case basis. Two points should be noted that will be relevant to Queensland's ultimate response.
First, on 25 May 2020, the remaining provisions of an omnibus amending Act (the Natural Resources and Other Legislation Amendment Act 2019 (Qld)) are expected to commence, and with those changes, the Minister is granted certain powers that will assist in responding to the current circumstances, including powers where an 'exceptional event' affects an exploration permit or authority to prospect, including to vary or remove certain conditions of the permit or authority. The peak industry bodies in Queensland (QRC, APPEA and AMEC) have requested and industry is awaiting confirmation from DNRME of proposed Queensland relief measures (including as indicated in this table), and including confirmation that from the Government's perspective, COVID-19 is considered an 'exceptional event' within the meaning of the amended legislation.
Second, initial indications are DNRME may proceed with enabling variations to forward commitments over a 12 month timeframe (taking account of the likely period of interruption); rent waivers or deferrals appear unlikely to be part of any response; and any responses are unlikely to address prior non-compliances.
Immediate relief to alleviate the COVID-19 impact
The measures announced by South Australia and Western Australia are intended to provide immediate relief to alleviate the impact of significant travel issues faced by all workers of companies, particularly those with notable FIFO or DIDO workforces. The current restrictions on entering remote Aboriginal Communities enacted by the Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Emergency Requirements for Remote Communities) Determination 2020 have presented unprecedented obstacles for many companies. In addition, as a result of travel restrictions to Aboriginal communities, ongoing native title negotiations and proceedings may face significant delays, providing further challenges to affected explorers.
To date, no other state or territory has released a formal announcement relating to relief for exploration licence holders. New South Wales have advised that a number of measures are under consideration and we will keep you informed as we learn more. In the meantime, we encourage parties to contact the relevant regulatory body for relief on a case-by-case basis.
Given the rapidly changing environment, state governments are making announcements and releasing new measures on an almost daily basis.
Contact our team if you require information or assistance around relief measures for your petroleum business.
