Petroleum Act 1998

Petroleum exploration and production companies: The primary regulated entities. They must hold appropriate authorities and comply with all operational, royalty, information-sharing, rehabilitation, and insurance obligations.

Landowners: Authority holders must give notice before carrying out operations on unrestricted Crown land (section 144) and obtain consents before operations on private land and restricted categories of Crown land (Part 9). Native title holders have specific protections for native title land.

The Minister (Department of Energy, Environment and Climate Action): Grants, renews, varies, suspends and cancels authorities; receives royalty payments; issues improvement and prohibition notices; approves operation plans.

Inspectors (s 198): Authorised by the Minister to monitor compliance, conduct searches, and exercise enforcement powers.

Authority required before exploration or production (ss 15–16): No person may explore for or produce petroleum without a current authority. Breach is a criminal offence.

Operation plan (ss 161–163A): Before conducting petroleum operations, authority holders must prepare an operation plan acceptable to the Minister. The plan must be observed. The Minister may require variations (section 163A).

Royalty payment (Part 10): Authority holders must pay royalty on petroleum produced at the applicable rate, at the times specified. Late payment attracts a penalty (section 159).

Rehabilitation (s 170): On cessation of operations or expiry of an authority, the authority holder must rehabilitate the site to the Minister's satisfaction.

Rehabilitation bond (ss 173–176): Authority holders must maintain a rehabilitation bond. If they fail to rehabilitate, the Minister may carry out rehabilitation and apply the bond to the costs (section 175).

Insurance (s 171): Authority holders must hold insurance.

Information obligations (Part 11, Division 3, ss 177–182): Must notify the Minister if petroleum is discovered (section 177); must provide information on request (section 179); must not provide false information (section 182).

Minister authority granting (Parts 3–6A): The Minister grants exploration permits following tender or application (sections 19–20A). When competing applications exist, section 21 specifies the chief factors for selection. Similar competitive selection criteria apply for other authority types.

Minister royalty variation (ss 156–157): May vary royalty rates in specified circumstances, or increase the rate up to 10%.

Minister operation plan (ss 163, 163A): May permit or require variation of an accepted operation plan.

Minister rehabilitation (s 175): May carry out rehabilitation and recover costs if the authority holder fails to do so.

Inspector compliance monitoring (ss 199–213): Inspectors may enter premises, conduct searches, seize items, and require information to monitor compliance.

Minister improvement and prohibition notices (ss 216–218): May issue improvement notices (requiring corrective action) and prohibition notices (requiring immediate cessation of dangerous activity). Enforcement orders may be obtained from a court (section 218).

Offences:

• Exploring without authority (s 15): criminal offence.
• Producing without authority (s 16): criminal offence.
• Hydraulic fracturing without authorisation (s 16A): criminal offence.
• Obstructing an inspector (s 215): criminal offence.
• Providing false information (s 182): criminal offence.
• Failing to comply with improvement notice: offence; defence available under section 221.

Corporations: Maximum fines for corporations are increased (section 223).

Civil enforcement: The Minister may obtain enforcement orders from courts (section 218). The Minister may carry out remediation and recover costs from the authority holder (section 175).

Review rights (Part 14): Rights to seek review of certain Ministerial decisions are specified in Part 14, including review of consent refusals (section 143) and disputed information release decisions (section 195).

Exploration permit application process:

1. Minister may invite tender applications for exploration permits (section 19). Public consultation required before invitation for certain areas (section 19A).
2. Applications lodged (section 20).
3. Minister evaluates against prescribed criteria (sections 20A, 20B, 21).
4. Permit granted; applicants notified (section 22).
5. Permit holder prepares and submits an operation plan.
6. Exploration activities conducted in accordance with approved work program and operation plan.

Royalty process:

1. Petroleum produced.
2. Royalty calculated based on well-head value (sections 151–153).
3. Paid at specified times (section 154).
4. Penalty for late payment (section 159).

Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Cth): Section 4 definitions of offshore area and various offshore authority types are drawn from this Act. The Commonwealth Act governs offshore petroleum operations; the Victorian Act governs onshore operations.

Native Title Act 1993 (Cth): Native title land is subject to specific provisions throughout the Act. The definitions of "native title land" and "owner" (for native title purposes) track the Commonwealth Native Title Act.

Mineral Resources (Sustainable Development) Act 1990 (Vic): Section 10 of the Petroleum Act specifies the relationship between the Petroleum Act and other Acts, including the Mineral Resources Act.

National Parks Act 1975 (Vic): Parks Crown land is subject to specific conditions on access and operations under Part 9.

Environment Protection Act 2017 (Vic): Environmental obligations including rehabilitation requirements interact with the EPA framework.

Petroleum is Crown property until extracted. Section 13 makes this clear. A landowner who finds petroleum on their property does not own it the Crown does. The right to produce petroleum is conferred only by a production licence.

Hydraulic fracturing is a separate offence and subject to a moratorium. Section 16A is a standalone prohibition, and section 17A creates a moratorium on petroleum exploration and production in specified areas. Both provisions need to be checked before any fracking-related activities are proposed.

Operation plans are mandatory and binding. The authority holder must prepare an operation plan, have it accepted by the Minister, and observe it. The Minister may require variations (section 163A). A plan that was originally adequate may become non-compliant if the Minister requires a variation, and the holder must comply.

Rehabilitation bonds must be maintained throughout the authority's life. The bond must be held, not just at the end. The Minister may require an increased bond if rehabilitation costs are reassessed (section 174). Failure to hold an adequate bond is an ongoing obligation.

Information release restrictions protect commercial data for specified periods. Part 12 contains complex rules about when information obtained during petroleum operations can be released. Interpretive information (analysis and conclusions drawn from raw data) has longer protection periods than factual information.

Scenario 1: Exploration permit application A resources company identifies a prospective area for natural gas exploration in regional Victoria. The company applies for an exploration permit through the tender process (section 19). The Minister evaluates the application against the criteria in sections 20A–21 (work program quality, technical and financial capacity, proposed expenditure). If successful, the company must prepare and have approved an operation plan before any exploration activities commence.

Scenario 2: Royalty on production A production licence holder produces 10,000 gigajoules of natural gas during the quarter. The royalty is calculated based on the well-head value of that gas (section 152). The royalty must be paid by the date specified in section 154. If late, the penalty in section 159 applies.

Scenario 3: Rehabilitation bond call An exploration permit holder abandons wells without rehabilitating the site. The Minister exercises powers under section 175 to carry out rehabilitation. The costs are applied against the rehabilitation bond. If the bond is insufficient, the Minister may recover the balance from the former permit holder.