Woodside Considering Position Following Condensate Tax Changes

Woodside is considering its position following a decision by the Commonwealth Government to impose an excise on condensate produced from the Woodside-operated North West Shelf Venture.

Woodside Chief Executive Don Voelte said the decision to introduce a condensate excise was made without any consultation with the company.

Mr. Voelte said the relief from condensate excise was among a range of measures between the North West Shelf participants and the Commonwealth and Western Australian governments that underpinned the economic viability of the project, while guaranteeing early financial returns to government.

"This is not a loophole which is being closed, or a free ride which has come to an end. This is a negotiated fiscal arrangement which formed the basis of Australia's largest resource development," Mr. Voelte said.

"We have lived up to our commitments under this arrangement.

"Governments have a responsibility to consult with industry on major issues such as this. On this occasion there was no consultation on changes to arrangements which we considered to be binding."

Mr. Voelte said the existing taxation arrangements had underpinned more than $25 billion in investment in the North West Shelf Venture, providing billions of dollars in revenues to the Western Australian and Commonwealth governments over the past 24 years.

The treatment for condensate was part of a larger fiscal package to facilitate the development of the North West Shelf in which the participants agreed to pay both royalty and excise from first production, despite incurring large capital costs which would take years to recover.

The arrangements resulted in revenues to government flowing from first production, many years before the project had recouped its costs. This contrasts with the current petroleum resource rent tax regime, in which tax is only paid once a project has recouped its costs.

"The North West Shelf Venture is a major contributor to the nation's gross domestic product, and any changes to the fiscal regimes under which existing major projects such as this operate should be considered extremely carefully," he said.