Natural gas producers' contribution to the economy

MYTH

FACT

In February 2024, Australian Energy Producers (AEP) released a report prepared by KPMG that highlights the impac¹:

• A$17.1 billion paid in taxes and royalties in 2023–24.
• A$105 billion to the national economy (A$85 billion directly).
• 3.7% of GDP comes from the gas industry's direct economic contribution.
• 215,000 people are employed across the economy (30,000 directly).
  

The gas industry (including both Australian and international producers) makes significant contributions to the broader economy, including supporting Australian employment and businesses. 

AEP's financial survey shows that A$16.3 billion of Australian taxes was paid in total by the oil and gas industry in the 2022–23 financial year, with A$17.1 billion expected to be paid by the industry in the 2023–24 financial year.² Wood Mackenzie has estimated that there is A$100 billion in payments to government due from offshore gas projects over the next two decades.³

The natural gas industry also supports the Australian economy through providing direct employment to Australians. In 2021–22, the natural gas industry directly supported more than 80,000 jobs and contributed A$84 billion to the economy.⁴ Woodside directly employs more than 3000 people in Australia and its operations will continue to create new construction and ongoing employment for Australians. For example, the development of Scarborough and Pluto Train 2 is expected to generate a peak workforce of 3200 people during construction and almost 600 direct jobs are expected to be created and sustained during operations.

A report released in August 2023 by ACIL Allen shows the significant contribution gas made to the Australian economy during the 2021–22 financial year. The analysis showed significant growth over the 12-month period, with gas generating A$121.17 billion in domestic economic activity to underpin 5.25% of gross domestic product.⁵ The report also highlights employment data, with Australian gas supporting 259,000 local jobs – 2.35% of all Australian full-time jobs.⁶

What are the main forms of taxation specific to petroleum projects?

• Petroleum resource rent tax (PRRT) is a 40% profits-based resource tax imposed by the Commonwealth Government. It applies to oil and gas projects located offshore in Australia’s Commonwealth waters. Projects become liable to pay PRRT after expenditures (as augmented by an appropriate rate of return) have been recouped. This means that the amount of PRRT payable at any given year will depend on factors such as the stage of a project and commodity prices. However, from 1 July 2023, liquefied natural gas (LNG) projects pay a minimum 10% of PRRT on assessable receipts. This does not apply to LNG projects in their first year of production or the following seven years.
• Commonwealth petroleum royalties, which currently apply only to the North West Shelf (NWS) Project, levied at 10–12.5% on the wellhead value of petroleum produced. The NWS Project remains the only offshore Australian project to be subject to both petroleum royalties and crude oil excise (see bullet point below). The Commonwealth petroleum royalties are payable to the Commonwealth Government. However, approximately two-thirds are shared with the Western Australian Government as prescribed by legislation. While it is not anticipated the NWS Project will pay PRRT, it is already subject to substantial Commonwealth royalties and taxation.
• Crude oil excise is imposed by the Commonwealth Government on eligible crude oil and condensate production from onshore areas (which includes coastal waters within three nautical miles of the Australian coastline) and the NWS Project area in Commonwealth waters. It is an ad valorem tax, levied at up to 30% of the market value of crude oil and condensate produced from a relevant area.