Changes to the Upstream Petroleum Regulatory Regime

The Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Act 2011 (the National Regulator Amendment Act) and associated Acts were passed by the Australian Parliament on 15 September 2011, and received Royal Assent on 14 October 2011.

The National Regulator Amendment Act amended the OPGGSA to establish the National Offshore Petroleum Titles Administrator (NOPTA) and expand the former National Offshore Petroleum Safety Authority to become the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

As a result of these amendments, from 1 January 2012, NOPTA and NOPSEMA commenced regulatory functions and powers under the OPGGSA, and the former Designated Authorities were abolished. Amendments to regulations under the OPGGSA have also been made to fully reflect and implement the transfer of regulatory responsibilities from the Designated Authorities to NOPTA and NOPSEMA.

For further information about the changes to regulatory arrangements, new cost-recovery levy arrangements, and information about changes to submission of documents from 1 January 2012, refer to Issue 18 of the General Policy Review.

New cost-recovery levy arrangements

In December 2002, the Australian Government adopted a formal cost recovery policy to improve the consistency, transparency and accountability of its cost recovery arrangements and promote the efficient allocation of resources. The underlying principle of the policy is that entities should set charges to recover all the costs of products or services where it is efficient and effective to do so, where the beneficiaries are a narrow and identifiable group and where charging is consistent with Australian Government policy objectives.

In its submission to the Senate Inquiry into the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010, the department identified that registration fees collected from industry were not being directly used to regulate the petroleum industry and were instead pooled into consolidated government revenues. There was not a direct correlation between the level of fees collected, and the regulatory costs incurred.

When the Australian Government decided to establish NOPTA and NOPSEMA, it did so on a full cost recovery basis from the petroleum and greenhouse gas storage sectors. This cost-recovery approach will, during a transition period of about two years, include continued collection of petroleum registration fees to fund the establishment of the new bodies. The Commonwealth will abolish the ad valorem registration fees once the establishment costs for NOPTA and NOPSEMA have been recovered. New cost-recovery levies have been implemented from the commencement of operations of NOPTA and NOPSEMA on 1 January 2012 to fund their ongoing regulatory activities.

The Australian Government anticipates that the establishment of NOPTA and NOPSEMA as transparent, accountable, efficient and fully cost-recovered regulators will ultimately reduce the overall costs for industry. The major cost to industry from regulation in the past has arisen from unnecessary delays in approvals processes (this far outweighs the cost of regulatory fees and levies). The establishment of NOPSEMA and NOPTA seeks to remove the regulatory duplication that was inherent in the former Joint Authority/Designated Authority processes and thereby reduce approvals timelines.

More information

For more information about offshore petroleum regulation and legislation, see Offshore petroleum regulatory regime.

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