Response to the release of the petroleum resource rent tax review
Chevron Australia welcomes the release of the Callaghan review on Petroleum Resources Rent Tax (PRRT). We agree with the main conclusions of the review, particularly that the PRRT has worked as intended encouraging major investment.
In Chevron Australia’s case, it has underpinned two major projects, Gorgon and Wheatstone, which have already delivered a range of benefits to Western Australia and Australia. They include:
- $60 billion in local content;
- 600 Australian companies supported during construction;
- 19,000 construction jobs created; and
- ·new domestic gas supply representing about 50 percent of the current WA market.
And despite claims you hear that Chevron Australia doesn’t pay its taxes, the company has paid around $4.5 billion in state and federal taxes since 2009.
After reaching full production, forecasts show Chevron will pay $2 to $3 billion a year in taxes by early to mid-2020s. That is before we pay PRRT.
We agree with the Callaghan Review’s finding against reverting to a royalty system. The PRRT should be retained, as it delivers a range of advantages to this nation. They include:
- Australia benefits through higher tax revenues;
- the community benefits from local employment, local contracts and domestic gas; and
- companies like Chevron benefit through profitable investments.
Read full statement here
PRRT is working
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 expects to start paying Petroleum Recourses Rent Tax (PRRT) by 2029-2035 and pay $60-$140 billion over the life of our projects.
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 about $4.5 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.
Read more about our economic impact here.