{"id":"C2006A00018","name":"Offshore Petroleum (Royalty) Act 2006","slug":"offshore-petroleum-royalty-act-2006","collection":"act","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":"18 of 2006","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":53165,"registerId":"commonwealth-C2006A00018-current","compilationNumber":null,"startDate":"2026-04-02","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Short title","content":"#### 1 Short title\n\n This Act may be cited as the Offshore Petroleum (Royalty) Act 2006.","sortOrder":0},{"sectionNumber":"2","sectionType":"section","heading":"Commencement","content":"#### 2 Commencement\n\n (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.\n\n```html\n

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1. Sections 1 and 2 and anything in this Act not elsewhere covered by this table

The day on which this Act receives the Royal Assent.

29 March 2006

2. Sections 3 to 17

At the same time as Chapter 2 of the Offshore Petroleum Act 2006 commences.

1 July 2008

3. Schedule 1

At the same time as the provision(s) covered by table item 2.

1 July 2008

\n```\n\n> Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent.\n\n (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act.","sortOrder":1},{"sectionNumber":"3","sectionType":"section","heading":"Application of Chapter 1 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006","content":"#### 3 Application of Chapter 1 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006\n\n Chapter 1 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 applies to this Act in a corresponding way to the way in which it applies to the Offshore Petroleum and Greenhouse Gas Storage Act 2006.\n\n> Note: This means, for example, that the definitions in section 7 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 apply to this Act.","sortOrder":2},{"sectionNumber":"4","sectionType":"section","heading":"Definitions","content":"#### 4 Definitions\n\n In this Act:\n\n> month means one of the 12 months of a year.\n\n> North West Shelf exploration permit means one of the North West Shelf exploration permits as defined by section 2 of the Petroleum Resource Rent Tax Assessment Act 1987.\n\n> North West Shelf production licence means a petroleum production licence that, under the Petroleum Resource Rent Tax Assessment Act 1987, is related to a North West Shelf exploration permit.\n\n> North West Shelf retention lease means a petroleum retention lease that, under the Petroleum Resource Rent Tax Assessment Act 1987, is related to a North West Shelf exploration permit.\n\n> primary petroleum production licence has the same meaning as in Schedule 4 to the Offshore Petroleum and Greenhouse Gas Storage Act 2006.\n\n> royalty means royalty payable under section 5.\n\n> royalty period, in relation to a North West Shelf exploration permit, a North West Shelf retention lease or a North West Shelf production licence, means:\n\n (a) the period beginning on:\n (i) the day on which the permit, lease or licence comes or came into force; and\n (ii) ending at the end of the month in which that day occurs; and\n (b) each later month.\n\n> secondary petroleum production licence has the same meaning as in Schedule 4 to the Offshore Petroleum and Greenhouse Gas Storage Act 2006.\n\n> State Minister means the responsible State Minister of Western Australia.\n\n> value has the meaning given by section 12.\n\n> Note: See also section 15, which deals with provisional value.\n\n> wellhead has the meaning given by section 11.","sortOrder":3},{"sectionNumber":"5","sectionType":"section","heading":"Imposition of royalty","content":"#### 5 Imposition of royalty\n\n The registered holder of:\n (a) a North West Shelf exploration permit; or\n (b) a North West Shelf retention lease; or\n (c) a North West Shelf production licence;\n is liable to pay a royalty on all petroleum recovered by the holder in the permit area, lease area or licence area in a royalty period beginning at or after the commencement of this section.\n\n> Note 1: For exemptions, see section 10.\n\n> Note 2: For collection of royalty, see Part 6.7 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006.","sortOrder":4},{"sectionNumber":"6","sectionType":"section","heading":"Rate of royalty—petroleum production licences","content":"#### 6 Rate of royalty—petroleum production licences\n\n (1) The rate of royalty on petroleum recovered under a petroleum production licence is worked out using the table:\n\n```html\n

Rate of royalty

Item

In this case...

the rate of royalty is this percentage of the value at the wellhead of the petroleum...

1

(a) petroleum recovered under a petroleum production licence granted otherwise than by way of renewal; and

(b) none of items 2, 3, 4 and 5 apply

10%

2

petroleum recovered under a secondary petroleum production licence granted otherwise than by way of renewal

the percentage determined under subsection (2) in relation to the petroleum recovered under the licence

3

petroleum recovered under a primary petroleum production licence granted otherwise than by way of renewal, where a secondary petroleum production licence is granted to the holder of the primary petroleum production licence

(with effect from the beginning of the next royalty period after the day on which the secondary petroleum production licence takes effect) the same percentage as is applicable to the petroleum recovered under the secondary petroleum production licence

4

petroleum recovered under a petroleum production licence granted on an application under section 182 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006

the same percentage as was applicable to petroleum recovered under the initial petroleum production licence (within the meaning of that section)

5

petroleum recovered under a petroleum production licence granted by way of renewal

the percentage that would be the rate of royalty if the renewed licence were the continuation in force of the previous licence

\n```\n\n Application for secondary petroleum production licence—determination of rate of royalty\n (2) If:\n (a) a person has applied for a primary petroleum production licence; and\n (b) before or after the grant of the primary petroleum production licence, the person applies for a secondary petroleum production licence;\n the Joint Authority must, by written instrument, determine the rate of royalty payable in relation to petroleum recovered, whether under the primary petroleum production licence or under the secondary petroleum production licence.\n (3) The rate must not be less than 11%, nor more than 12.5%, of the value at the wellhead of that petroleum.\n (4) Before determining the rate of royalty payable, the Joint Authority must:\n (a) give the person an opportunity to confer with the State Minister about the rate; and\n (b) give the State Minister an opportunity to report to the Joint Authority about any such conferring; and\n (c) consider the State Minister’s report.\n (5) A determination under subsection (2) is not a legislative instrument.\n Royalty at the prescribed rate\n (6) A reference in a petroleum production licence (whether granted before or after the commencement of this subsection) to:\n (a) royalty at the prescribed rate; or\n (b) royalty at the rate that is for the time being the prescribed rate;\n is to be read as a reference to royalty at the rate that is or was the rate of royalty applicable in accordance with the provisions of this Act, as in force from time to time.","sortOrder":5},{"sectionNumber":"7","sectionType":"section","heading":"Rate of royalty—petroleum exploration permit","content":"#### 7 Rate of royalty—petroleum exploration permit\n\n (1) The rate of royalty on petroleum recovered under a petroleum exploration permit is 10% of the value at the wellhead of the petroleum.\n Royalty at the prescribed rate\n (2) A reference in a petroleum exploration permit (whether granted before or after the commencement of this subsection) to:\n (a) royalty at the prescribed rate; or\n (b) royalty at the rate that is for the time being the prescribed rate;\n is to be read as a reference to royalty at the rate that is or was the rate of royalty applicable in accordance with the provisions of this Act, as in force from time to time.","sortOrder":6},{"sectionNumber":"8","sectionType":"section","heading":"Rate of royalty—petroleum retention lease","content":"#### 8 Rate of royalty—petroleum retention lease\n\n (1) The rate of royalty on petroleum recovered under a petroleum retention lease is 10% of the value at the wellhead of the petroleum.\n Royalty at the prescribed rate\n (2) A reference in a petroleum retention lease (whether granted before or after the commencement of this subsection) to:\n (a) royalty at the prescribed rate; or\n (b) royalty at the rate that is for the time being the prescribed rate;\n is to be read as a reference to royalty at the rate that is or was the rate of royalty applicable in accordance with the provisions of this Act, as in force from time to time.","sortOrder":7},{"sectionNumber":"9","sectionType":"section","heading":"Reduction of royalty—potentially uneconomic wells","content":"#### 9 Reduction of royalty—potentially uneconomic wells\n\n Scope\n (1) This section applies if the State Minister is satisfied that the rate of recovery of petroleum from a well has become so reduced that, having regard to the rate or rates of royalty applicable under section 6, 7 or 8, further recovery of petroleum from that well would be uneconomic.\n Reduction of royalty\n (2) The Joint Authority may, by written instrument, determine that the royalty in relation to any or all of the petroleum recovered from that well on or after a date specified in the determination is to be such lower rate as is specified in the determination.\n (3) The Joint Authority may, by written instrument, revoke or vary a determination under subsection (2), and the revocation or variation applies to petroleum recovered on or after such date as is specified in the instrument.\n (4) A determination under subsection (2) has effect despite section 6, 7 or 8.","sortOrder":8},{"sectionNumber":"10","sectionType":"section","heading":"Exemptions from royalty","content":"#### 10 Exemptions from royalty\n\n (1) Royalty under this Act:\n (a) is not payable in relation to petroleum that the State Minister is satisfied was unavoidably lost before the quantity of that petroleum was ascertained; and\n (b) is not payable in relation to petroleum if:\n (i) the State Minister is satisfied that the petroleum was used by the registered holder of the petroleum exploration permit, petroleum retention lease or petroleum production licence for the purposes of petroleum exploration operations or operations for the recovery of petroleum; and\n (ii) the use did not contravene the Offshore Petroleum and Greenhouse Gas Storage Act 2006 or regulations under that Act; and\n (c) is not payable in relation to petroleum if:\n (i) the State Minister is satisfied that the petroleum has been flared or vented in connection with operations for the recovery of petroleum; and\n (ii) the flaring or venting did not contravene the Offshore Petroleum and Greenhouse Gas Storage Act 2006 or regulations under that Act.\n (2) If petroleum has been recovered by the registered holder of:\n (a) a petroleum exploration permit; or\n (b) a petroleum retention lease; or\n (c) a petroleum production licence;\n royalty under this Act is not payable in relation to the petroleum because of that recovery if:\n (d) the State Minister is satisfied that the petroleum has been returned to a natural reservoir; and\n (e) the return of the petroleum to the reservoir did not contravene the Offshore Petroleum and Greenhouse Gas Storage Act 2006 or regulations under that Act.\n (3) Subsection (2) does not affect the liability of that or any other registered holder to pay royalty in relation to petroleum that is recovered from that natural reservoir.","sortOrder":9},{"sectionNumber":"11","sectionType":"section","heading":"Meaning of wellhead","content":"#### 11 Meaning of wellhead\n\n For the purposes of this Act, the wellhead, in relation to any petroleum, is:\n (a) such valve station as is agreed between:\n (i) the registered holder of the petroleum exploration permit, petroleum retention lease or petroleum production licence; and\n (ii) the State Minister; or\n (b) if there is no agreement within such period as the State Minister allows—such valve station as the State Minister determines to be that wellhead.","sortOrder":10},{"sectionNumber":"12","sectionType":"section","heading":"Meaning of value","content":"#### 12 Meaning of value\n\n For the purposes of this Act, the value at the wellhead of any petroleum is:\n (a) such amount as is agreed between:\n (i) the registered holder of the petroleum exploration permit, petroleum retention lease or petroleum production licence; and\n (ii) the State Minister; or\n (b) if there is no agreement within such period as the State Minister allows—such amount as the State Minister determines to be that value.","sortOrder":11},{"sectionNumber":"13","sectionType":"section","heading":"Quantity of petroleum recovered","content":"#### 13 Quantity of petroleum recovered\n\n For the purposes of this Act, the quantity of petroleum recovered by the registered holder of a petroleum exploration permit, petroleum retention lease or petroleum production licence from a well during a period is taken to be:\n (a) the quantity measured during that period by a measuring device:\n (i) approved by the State Minister; and\n (ii) installed at the wellhead or at such other place as the State Minister approves; or\n (b) if:\n (i) no such measuring device is so installed; or\n (ii) the State Minister or the Joint Authority is not satisfied that the quantity of petroleum recovered by the registered holder from that well has been properly or accurately measured by such a measuring device;\n the quantity determined by the State Minister as being the quantity recovered by the registered holder from that well during that period.","sortOrder":12},{"sectionNumber":"14","sectionType":"section","heading":"Directions by Joint Authority","content":"#### 14 Directions by Joint Authority\n\n (1) The Joint Authority must give directions to the State Minister about the manner in which the State Minister is to exercise the powers conferred by sections 11, 12 and 13.\n (2) A direction under subsection (1) must relate to a particular petroleum exploration permit, petroleum retention lease or petroleum production licence.\n (3) The State Minister must comply with a direction under subsection (1).\n (4) A direction under subsection (1) is not a legislative instrument.","sortOrder":13},{"sectionNumber":"15","sectionType":"section","heading":"Provisional payment of royalty","content":"#### 15 Provisional payment of royalty\n\n (1) If, in relation to petroleum recovered during a royalty period, the value of the petroleum has not been agreed or determined under section 12, the State Minister may determine a provisional value.\n (2) If:\n (a) a provisional value of any petroleum has been determined under subsection (1); and\n (b) the value of that petroleum has not yet been agreed or determined under section 12;\n this Act has effect, in relation to that petroleum, as if:\n (c) the provisional value of the petroleum were its value; and\n (d) the determination of the provisional value were an agreement or determination under section 12.","sortOrder":14},{"sectionNumber":"16","sectionType":"section","heading":"Adjustment of payments of royalty","content":"#### 16 Adjustment of payments of royalty\n\n Scope\n (1) This section applies if:\n (a) subsection 15(2) has operated in relation to petroleum recovered during a royalty period, and a value of the petroleum different from the provisional value is subsequently agreed or determined under section 12; or\n (b) an error has been made in:\n (i) the calculation of royalty due; or\n (ii) the application of a procedure for ascertaining the value of the petroleum.\n Adjustment\n (2) If the determined royalty is greater than the provisional royalty, the difference is payable by the registered holder concerned.\n (3) If the determined royalty is less than the provisional royalty, the difference is to be:\n (a) deducted from any amount subsequently payable under this Act by the registered holder concerned; or\n (b) if no amount is likely to be subsequently payable under this Act by the registered holder concerned—refunded to the registered holder.\n Definitions\n (4) In this section:\n\n> determined royalty means:\n\n (a) if paragraph (1)(a) applies—the amount of royalty payable in relation to the petroleum on the basis of the value ascertained under section 12; or\n (b) if paragraph (1)(b) applies—the amount of royalty payable in relation to the petroleum.\n\n> provisional royalty means:\n\n (a) if paragraph (1)(a) applies—the amount of royalty payable in relation to the petroleum on the basis of the provisional value; or\n (b) if paragraph (1)(b) applies—the amount of royalty demanded in relation to the petroleum as a result of the erroneous:\n (i) calculation of royalty due; or\n (ii) application of a procedure for ascertaining the value of the petroleum.","sortOrder":15},{"sectionNumber":"16A","sectionType":"section","heading":"Delegation by State Minister","content":"#### 16A Delegation by State Minister\n\n The State Minister may, by written instrument, delegate to an employee of Western Australia any or all of the powers or functions of the State Minister under this Act.","sortOrder":16},{"sectionNumber":"17","sectionType":"section","heading":"Transitional provisions","content":"#### 17 Transitional provisions\n\n Schedule 1 has effect.","sortOrder":17}],"analysis":{"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"},"summary":{"complexity_score":6,"scope_assessment":{"changed":false,"description":"The Act is explicitly described as a re-enactment of the Petroleum (Submerged Lands) (Royalty) Act 1967 with modifications. The scope remains consistent with the original legislation — it applies specifically to royalties on petroleum recovered from North West Shelf permits, leases and licences. The transitional provisions confirm continuity of purpose, and no expansion or contraction of the fundamental royalty obligation is evident."},"complexity_factors":["Multiple interacting pieces of legislation referenced (Offshore Petroleum and Greenhouse Gas Storage Act 2006, Petroleum Resource Rent Tax Assessment Act 1987, repealed Petroleum (Submerged Lands) Acts)","Tiered royalty rate structure with five different scenarios for production licences, including cross-references to other licence types","Distinction between primary and secondary petroleum production licences adds a layer of classification complexity","Value and wellhead definitions rely on negotiated agreements with regulatory fallback determinations, creating uncertainty","Transitional provisions requiring the old law to continue operating for pre-commencement royalty periods in parallel with the new law","Joint Authority and State Minister roles overlap and interact, requiring readers to understand dual Commonwealth-State governance arrangements","Provisional value and adjustment mechanisms introduce a two-step payment process that requires reconciliation","Geographic and licence-type specificity (North West Shelf only) means readers must cross-reference other legislation to determine whether they are even subject to this Act"],"plain_english_summary":"This Act sets the royalty framework for oil and gas extracted from the North West Shelf off Western Australia, applying to holders of exploration permits, retention leases and production licences. It establishes a standard 10% wellhead royalty (with higher 11–12.5% rates for some secondary production licences), allows reductions for marginal wells, and preserves transitional arrangements from the prior law.\n\nValue is normally agreed with the WA State Minister (or determined by them), with provisional payments and later adjustments if needed."},"kimi_summary":{"content_quality":"ok","complexity_score":5,"scope_assessment":{"changed":false,"description":"The legislation remains tightly focused on its original purpose of imposing and administering royalties on North West Shelf petroleum production. While it modernises the 1967 Act it replaces, the scope has not expanded beyond petroleum royalty collection for this specific geographic and regulatory regime."},"complexity_factors":["Multiple interlocking statutes: The Act cannot be understood without reference to the Offshore Petroleum and Greenhouse Gas Storage Act 2006, the Petroleum Resource Rent Tax Assessment Act 1987, and the repealed Petroleum (Submerged Lands) Act 1967","Tiered royalty rate structure with 5 different scenarios in section 6, including conditional triggers based on licence type (primary vs secondary), grant method (renewal vs new), and cross-references to other licence applications","Extensive delegation of discretionary power to the State Minister and Joint Authority for determinations, with procedural requirements (consultation, reporting) before certain decisions","Transitional provisions in Schedule 1 that preserve old law for pre-commencement periods while mapping old instruments to new provisions using 'substance over form' tests","Dual valuation mechanisms: agreement-based or Minister-determined, with provisional value system and adjustment mechanisms in sections 15-16","Definition of 'wellhead' and 'value' require bilateral agreement or Ministerial determination, creating administrative rather than statutory certainty"],"plain_english_summary":"**What this law does:**\n\nThis Act imposes a **royalty** (a tax-like payment to the government) on companies that extract petroleum (oil and gas) from specific offshore areas in Australian waters, particularly the **North West Shelf** off Western Australia.\n\n**Who it affects:**\n\n- **Oil and gas companies** holding exploration permits, retention leases, or production licences for the North West Shelf\n- The **Western Australian State Minister** (who has significant powers to determine values, approve measurements, and grant exemptions)\n- The **Joint Authority** (a federal-state body that oversees offshore petroleum operations)\n\n**Key rules:**\n\n- **Standard royalty rate:** Generally **10%** of the petroleum's value at the wellhead (the point where it comes out of the ground)\n- **Higher rates for secondary licences:** Between **11-12.5%** for certain secondary production licences, determined by the Joint Authority after consulting the State Minister\n- **How value is calculated:** Either by agreement between the company and the State Minister, or by the Minister's determination if they can't agree\n- **Exemptions:** No royalty on petroleum that is:\n - Unavoidably lost before measurement\n - Used for exploration or recovery operations (if lawful)\n - Flared or vented lawfully\n - Returned to underground reservoirs\n- **Uneconomic wells:** The royalty rate can be reduced for wells where production has dropped so low that extraction would become unprofitable\n\n**Why it matters:**\n\nThis ensures Australia gets paid for its natural resources extracted from offshore areas. It replaced an older 1967 law with clearer, modernised rules while preserving existing arrangements. The Act carefully balances federal and state interests—Western Australia gets significant say in valuations and exemptions, reflecting the location of these resources in state waters."},"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":true,"description":"The Act expressly re‑enacts the Petroleum (Submerged Lands) (Royalty) Act 1967 with modifications. Transitional clauses preserve the old Act for pre‑commencement royalty periods and convert existing determinations, directions and agreements to corresponding instruments under this Act, so the legal coverage and processes were updated rather than left identical to the 1967 regime."},"complexity_factors":["Multiple royalty rates and conditional rules (production, exploration, retention, primary vs secondary licences).","Joint Authority role in determining rates for secondary licences and issuing directions to the State Minister.","Significant Ministerial discretion to determine wellhead, value and provisional values when parties do not agree.","Rules for measurement (approved devices) and State Minister determinations where measurements are absent or disputed.","Mechanism for provisional payments and later adjustments, including refunds or additional payments.","Exemptions and revocable reductions for specific circumstances (loss, use, flaring, re‑injection, potentially uneconomic wells).","Transitional provisions re‑enacting and modifying the 1967 Act and carrying forward pre‑existing instruments."],"plain_english_summary":"This Act requires registered holders of North West Shelf exploration permits, retention leases and production licences to pay royalty on petroleum recovered, and sets standard rates (generally 10%, with a prescribed 11–12.5% band for certain secondary licences). It establishes who decides wellhead location and value, how quantities are measured, provisional payments and adjustments, and allows limited exemptions and reductions for uneconomic wells. Licence holders bear the payment and compliance burden; the State Minister and the Joint Authority have key discretionary and determinative roles."}},"importantCases":[],"_links":{"self":"/api/acts/offshore-petroleum-royalty-act-2006","history":"/api/acts/offshore-petroleum-royalty-act-2006/history","analysis":"/api/acts/offshore-petroleum-royalty-act-2006/analysis","conflicts":"/api/acts/offshore-petroleum-royalty-act-2006/conflicts","importantCases":"/api/acts/offshore-petroleum-royalty-act-2006/important-cases","documents":"/api/acts/offshore-petroleum-royalty-act-2006/documents"}}