Under the Australian Government's Budget announcement yesterday, exploration costs in frontier areas will qualify for a 150% deduction against income subject to Petroleum Resources Rent Tax.
"This is an important and necessary initiative and a very positive first step for which we commend the Government," said Woodside's Director of New Ventures, Agu Kantsler.
"It is important for Australia because the nation's oil production is in decline and will fall dramatically over the next decade unless exploration is increased and more oil fields are discovered and developed.
"It is necessary because Australia needs to remain competitive with other areas of the world where attractive taxation regimes encourage companies to explore in what is a high-risk industry.
"This change will encourage increased exploration in deep water and other frontier areas where the exploration costs and risks are greatest."
Projections by Australian Government forecasting agencies indicate that Australia faces a rapid decline in liquid petroleum production over the next decade with self-sufficiency expected to decline from an average of 80-90% over the past decade to less than 40% by 2010.
Dr Kantsler said Australia would continue to require secure supplies of oil and gas for the foreseeable future, despite advances in other energy technologies.
"Oil and gas projects also generate large economic and tax revenue benefits so it has been wise of the Government to modify the petroleum taxation regime in this way."
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