(Corrects all dollar figures to A$)
MELBOURNE Nov 28 The North West Shelf joint
venture, Australia's biggest oil and gas operation, cut
royalties it owed by claiming more than A$5 billion ($3.7
billion) in deductions, some of which weren't valid, over the 18
months to December 2015, a government watchdog said on Monday.
The Australian National Audit Office (ANAO) said government
departments need to take steps to tighten their collection of
royalties from the North West Shelf, which accounts for about
one-third of the country's oil and gas output.
The finding comes at a time when oil and gas producers have
been hammered by a slump in prices.
"The Royalty Schedule does not permit all the deductions
currently being claimed," the audit office said in a report
released on Monday.
It said the joint venture reduced the royalty payable by
taking more than A$5 billion in deductions, including operating
costs, depreciation, cost of capital, crude oil and condensate
excise, processing tariffs and joint venture participant costs.
Revenue reported from North West Shelf petroleum sales
between July 2014 and December 2015 was A$19.7 billion on which
A$1.9 billion in royalties were due. Of that, about a third went
to the federal government and the rest to the state of Western
The audit office questioned the eligibility of deductions
claimed for the cost of debt and equity funded capital and the
excise paid on crude and condensate.
Australia's Department of Industry agreed with the audit
office's recommendations for improving royalty collection.
Western Australia's department of mines and petroleum,
however, considered its processes robust and said "the
Commonwealth and State governments can be confident that
royalties are being accurately assessed and collected."
The North West Shelf joint venture is operated by Woodside
Petroleum. Its partners are BHP Billiton
, BP, Chevron Corp, Japan's
Mitsubishi Corp and Mitsui & Co, and Royal
Woodside had no immediate comment on the report.
($1 = 1.3385 Australian dollars)
(Reporting by Sonali Paul; Editing by Michael Perry)