Petroleum Resources Rent Tax (PRRT)
The $200 billion-plus investment in Australia’s energy industry is evidence that the current tax regime is working.
The Petroleum Resource Rent Tax (PRRT), which is currently under review by the Federal government, was introduced in the 1980’s as a profits-based tax designed to deliver substantial returns once investors had recovered their capital costs. Its high 40 percent tax rate has netted in the order of $25 billion for the nation over three decades.
Chevron Australia - one of the largest investors in the Australian petroleum industry leading the combined investment of $80+ billion in the Gorgon and Wheatstone projects - is testament to the sound working of the PRRT in attracting investment into Australia.
Chevron is making a significant economic contribution - on jobs, tax revenue and energy security.
Since 2009, Chevron’s paid almost $4 billion in federal and state taxes and royalties. Once the Chevron-led Gorgon and Wheatstone Projects are up and running and profitable, this contribution will increase significantly.
It is entirely appropriate that projects in the start-up phase have not yet generated company tax. Their fiscal and economic benefits must be assessed over their entire project lives, which in the case of Gorgon is 40+ years.
Any changes to the PRRT must ensure future investment is encouraged; that existing project economics are not retrospectively undermined; and that Australia’s international competitiveness is not further compromised.
Independent research shows over the operating lives of Gorgon and Wheatstone (2009 to 2040) as well as Chevron’s other activities in Australia, these operations are expected to deliver:
- More than $1 trillion to Australia’s GDP
- Almost 150,000 jobs in Australia
- $338 billion to Federal government revenue
For Australia to remain competitive at attracting constrained capital, it needs to offer globally attractive fiscal regime, not make more adverse changes to the PRRT.
Chevron Australia, along with other oil and gas companies, has provided a submission to the Government’s PRRT review which you can read here.
Chevron's 30+ year economic impact in Australia
Chevron’s development of the Gorgon and Wheatstone natural gas projects, together with Chevron’s other activities in Australia, will create enduring benefits that will help shape the Nation’s economic future and spearhead Australia’s growing importance as a global natural gas supplier.
The projects Chevron has invested in and its other activities in Australia1 have already delivered direct and indirect economic benefits to the Australian economy. Over the period 2009 to 2014, these include:
- More than $60 billion has been committed to Australian goods and services to develop the Gorgon and Wheatstone Projects2
- Almost 1000 contracts have been awarded to Australian companies to develop the Gorgon and Wheatstone Projects.
- Almost 19,000 workers have been directly employed.
- More than $1 billion has been invested in research and development in Australia.
- More than $53 million has been invested into universities and research institutes to help build local academic excellence and research capability.
- Almost $300 million has been committed to community investments, including $250 million to critical and social infrastructure in Onslow associated with the Wheatstone Project.
- Nearly $1.6 billion has been spent on exploration activities in Australia between 2009 and 2014, resulting in more than 25 offshore discoveries.
The projects Chevron has invested in and its other activities in Australia are expected to deliver significant long-term direct and indirect economic benefits to the Australian economy. Over the period 2009 to 20403, these include:
- More than $1 trillion to the Gross Domestic Product (GDP) of
Australia, nearly $32 billion per year.
- Almost 150,000 full time equivalent (FTE) job years in Australia,
nearly 5000 per year.
- $338 billion to Federal Government revenue.
- More than $320 billion added to real incomes in Australia,
around $10 billion per year.
- At full capacity, the Gorgon and Wheatstone Projects have the
capacity to produce 500TJ/d of domestic gas (domgas), around
50 per cent of current domgas supply in Western Australia.
- In operations, for every Chevron job, another job will be
created in Australia.
1 Chevron’s head office activities in Australia are managed through the Australian Business Unit.
2 Value of work done to first quarter 2015.
3 All economic forecasts are based on the period 2009-2040 and are based on indicative estimates as of January 2015.