APPEA Slams Gov’t Cash Bidding Initiative (Australia)

APPEA Slams Gov't Cash Bidding Initiative (Australia)

The Australian Government plans to introduce cash bidding as a basis for awarding offshore exploration acreage in “mature areas”, Minister for Resources and Energy Martin Ferguson announced Wednesday.

The move, described by the government as a positive one for the budget and all the Australians, was slammed by the oil and gas industry representatives.

APPEA, the peak body representing Australia’s oil and gas industry said it was disappointed by the Federal Government’s announcement.

APPEA Chief Executive David Byers said: “APPEA has consistently been a strong supporter of the work program bidding system. Cash bid payments reduce the overall pool of funds available for companies to undertake exploration, because they divert funds from the drilling of wells to the payment of government access charges.

The existing system, which has been in place for many years, assesses proposed work programs and their likelihood of success.

Byers added: “The introduction of cash bidding has the potential to impact on Australia’s small explorers who may have limited funds available for exploration. Many of these companies have been directly responsible for identifying the resource potential of regions and basins that are now producing oil and gas in Australia.

“It is important the industry and the Government work together to ensure the cash bidding system is not introduced in a way that impairs Australia’s overall attractiveness for exploration activity. This includes continuing the work program bidding system where appropriate and providing clarity on cash bidding application rules where they apply. APPEA therefore welcomes the Government’s commitment to work with the industry on the detailed application of cash bidding.

 November 15, 2012