This fact sheet provides information on the legal framework within which petroleum exploration and development activity takes place in Australia; including the role of governments, petroleum law, offshore petroleum titles, offshore greenhouse gas storage, onshore petroleum exploration, the offshore safety and environment regime and native title rights.

Roles and Responsibilities of Government

Australia’s system of government is founded in the liberal democratic tradition and is one of the oldest continuous democracies in the world. Australia is a representative democracy where people eligible to vote elect representatives to speak and make decisions on their behalf. Australian citizens vote to elect representatives to each of the three levels of government – federal, state or territory and local.

The Constitution defines the responsibilities of the federal government, which include foreign relations, trade with other countries, defence and immigration. Governments of states and territories are responsible for issues such as transport infrastructure, health and education and local governments are responsible for issues such as road maintenance, garbage collection, public facilities etc. All levels of Government adhere to the principles of responsible government and Australian law.

Australian governments do not undertake commercial petroleum exploration or development.

The governments’ roles in relation to the petroleum sector are to:

  • establish the macroeconomic environment (broad economic policy);
  • provide a regulatory framework for exploration, development, safety, environmental assessment and revenue collection;
  • reduce commercial risk in petroleum exploration by collecting and disseminating geoscientific information; and
  • investigate ways to remove impediments to industry competitiveness.

Both the national government (the Australian Government) and the state and territory governments have roles in facilitating petroleum exploration and development:

  • the Australian Government is responsible for broad economic policy and international matters, including personal and company income tax, the overall level of government spending, foreign investment guidelines, trade and customs, commercial corporations and international agreements;
  • beyond the coastal waters (seaward of the first three nautical miles of the territorial sea) to the outer limits of Australia's continental shelf, petroleum rights are held by the Australian Government, with titles administration carried out jointly with the relevant state or territory government; and
  • onshore and in coastal waters (effectively the first threenautical miles from the coastline), the states andterritories own and allocate petroleum rights, administerpetroleum operations and collect royalties onpetroleum produced.

Because of their shared interest in the contribution of the petroleum sector to national economic wellbeing, the Australian and state and territory governments hold regular formal consultations, with a view to ensuring coordination of policy and regulatory requirements for the sector.

Under international law, Australia has sovereignty over the territorial sea and sovereign rights for exploring and developing mineral and hydrocarbon resources over the Exclusive Economic Zone (EEZ), and the Continental Shelf. This jurisdiction extends from the territorial sea baseline to the outer edge of the Continental Shelf and accounts for an area over 14.4million square kilometres - an area greater than Australia’s total land area and one of the largest marine jurisdictions in the world. Petroleum exploration and development in the Timor Sea Joint Petroleum Development Area (JPDA) is governed by the Timor Sea Treaty with Timor-Leste, which came into force in April2003 (further details are available on the RET website at the Joint Petroleum Development Area and Greater Sunrise section). Offshore petroleum acreage in the JPDA is released and administered by the Timor-Leste National Petroleum Authority on behalf of both countries.

Petroleum Law in Australia

The legal framework within which offshore petroleum exploration and development activity takes place in Australiais a result of agreement on the division of responsibilities between the Australian Government and thestate and Northern Territory (NT) governments under theOffshore Constitutional Settlement.

Offshore petroleum operations beyond coastal waters (i.e.greater than 3 nautical miles from the low tide coastline) are governed by Commonwealth legislation known as the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGSA) and associated Regulations.

Within the OPGGSAlegislativeframework, the Australian Government and the states/NT jointly grantpetroleum titles and exercise resource developmentfunctions through a Joint Authority (JA) arrangement. Each JA comprises the Australian Government’s Resources and Energy Minister and the relevant state/NT Minister. In addition, the OPGGSA makes the National Offshore Petroleum Titles Administrator (NOPTA) responsible for titles administration and data management functions. The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), as Australia’s independent regulator of offshore petroleum operations,isresponsible for regulation of occupational health and safety, structural integrity of facilities and wells, environmental management and day-to-day operational compliance. NOPSEMA is the regulator in Commonwealth waters, and also in those coastal waters jurisdictions where state and Northern Territory powers have been conferred on NOPSEMA.

The legislation provides for the orderly exploration for, and recovery of,offshore petroleum resources and sets out a basic framework of rights, entitlements and responsibilities of governments and industry.

The key matters covered in the legislation are:

  • issue of invitations to apply for exploration permits;
  • granting of permits to successful applicants and determination of conditions of the title;
  • declaring locations where petroleum has been discovered;
  • granting of retention leases over discoveries that are not currently commercially viable but are likely to become commercial within 15 years;
  • granting of production and pipeline licences;
  • granting of infrastructure licences for various processing activities;
  • renewal of titles (where appropriate);
  • approval of applications for the registration of legal transactions, including farm-ins and transfers of titles;
  • granting of special prospecting
    authorities, access authorities, and consents for scientific investigations; and
  • variations of title conditions, exemption from title commitments, surrender of titles by a titleholder and cancellation of titles for non-compliance with the conditions of the title or the Act or the regulations.

Except for environmentally sensitive areas (such as the Great Barrier Reef Marine Park off the Queensland coast), petroleum operations are permitted on most parts of the continental shelf. More information on restrictions in Commonwealth Marine Reserves can be found at:

Factors such as navigation, defence, native title rights, fisheries and the marine environment are carefully considered prior to the release of acreage by the Joint Authority. Once titles are awarded, these issues are managed via the environment plan that must be accepted by NOPSEMA before a petroleum activity can be carried out and by compliance with titleholder obligations under the OPGGSA (for example, in section 280 OPGGSA).

Additional information on matters coming within the Australian Government's responsibilities for offshore exploration and development is set out in:

  • the OPGGSA, the associated Explanatory Memoranda and Second Reading Speeches to the original 2006 Act and the subsequent amendments;
  • the Regulations issued under the OPGGSA (notably in relation to management of the environment, occupational health and safety,well operations,field development plans and data management);
  • the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Act 2006 and Regulations;
  • the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 and Regulations;
  • the Petroleum Resource Rent Tax Act 1987 and company taxation legislation;
  • Guidelines issued to assist with the administration of the legislation; and
  • the International Unitisation Agreement (IUA) and various treaties with neighbouring states including the Timor Sea Treaty, the Treaty on Certain Maritime Arrangements in the Timor Sea and thePerth Treaty, whichestablish Australia’s northern maritime boundaries and consequent rights and obligations of the parties in regards to the exploration for, and exploitation of, hydrocarbon resources.

An electronic compendium of current legislation, regulations governing the offshore petroleum industry can be found at: associated guidelines are available at:

Industry may also subscribe to receive regular updates on regulatory developments through the free occasional
e-newsletter, Australian Petroleum News by emailing your details to .

Offshore Petroleum Titles

Petroleum industry activities may only occur in Commonwealth offshore waters if an entity holds a valid petroleum title or authorisation granted in accordance with the OPGGSA. There arefive types of petroleum titles that may be granted depending on the activity to be undertaken:

  • Exploration Permit–a six year title (that may be renewed for two periods of five years) that providesrights to undertake exploratory activities such as seismic surveys and drilling within the permit area;
  • Retention Lease–a five year title (can be renewed) granted to the holder of an exploration permit or a production licence where a discovery has been made which is not currently commercially viable, but is likely to become so within 15 years;
  • Production Licence–a life-of-field title that is granted to the holder of an exploration permit or a retention lease for the recovery of petroleum following a commercial discovery;
  • Infrastructure Licence - granted to enable the construction of offshore facilities for the storage and conversion of petroleum; and
  • Pipeline Licence - granted for the construction and operation of a petroleum transport pipeline.

Petroleum titles are awarded on a successive basis, beginning with an exploration permit. If a discovery is made and a location is declared, the titleholder may apply for a production licence if the discovery is commercial or for a retention lease if the discovery is not commercial but is expected to become commercial within 15 years. From a retention lease, the titleholder progresses to a production licence once the discovery becomes commercial. The chart overleaf outlines the basic offshore title system.

Titles are awarded over areas comprising one or more graticular blocks of 5minute longitude and 5minutes latitude. Part blocks may exist where graticular sections are bisected by a jurisdictional boundary, but they are still treated for all purposes as “blocks”.

In areas not covered by titles, companies may apply for a Special Prospecting Authority (SPA) to undertake seismic or other geophysical or geochemical survey work (but not to drill a well) in a particular area for a period of up to 180 days. A SPA provides a non-exclusive right to examine an area prior to any potential invitation for applications for an exploration permit. An SPA does not provide any rights in relation to the award of a future exploration permit.

Existing titleholders (including SPA holders) who wish to undertake petroleum exploration activities (other than drilling a well) in areas proximal to their existing title may apply for an Access Authority. An Access Authority may provide access to a vacant area or an area covered by a title to enable the applicant to fully explore the area over which it is the titleholder. An Access Authority will remain in force for the period specified in the authority, unless surrendered or cancelled, and does not provide any rights in relation to the award of a future exploration permit.

2013 Offshore Petroleum Titles Process

Exploration Permits

Prospective offshore exploration areas are released annually by the Offshore Petroleum Joint Authorityfor bidding under a work program system.

Under the work program bidding system, an applicant is required to propose an exploration strategy that has the potential to significantly advance the assessment and understanding of the petroleum potential of the permit area. The exploration strategy should be supported by a technical assessment of the release area and the work program proposed for the six year permit term.

The first three years of the program, known as the primary(minimum guaranteed) work program, cannot be reduced once the permit has been awarded. Secondary work programs (years four, five and six for initial permit terms; years four and five for renewed permits) become guaranteed on a year-by-year basis. Failure to complete guaranteed work program commitments may result in the commencement of permit cancellation proceedings

Titleholders must undertake each component of the guaranteed work program within the permit area in the prescribed year. Work program commitments undertaken prior to an agreed year may be credited towards the guaranteed work program – under such circumstances, titleholders are advised to consult with NOPTA prior to the early commencement of work.

Recognising the need for flexibility in exploration programs, atitleholder may, during the life of the permit, apply to the Joint Authority for a variation or suspension and/or extension of the permit conditions (e.g. work program commitments). Circumstances where these applications may be considered by the Joint Authority can be found in the Permit Conditions and Administration Guideline.

All applications for exploration permits are initially assessed against published selection criteria by NOPTA, who advises the relevant Joint Authority.In assessing a bid, NOPTA and then the Joint Authority considers the technical merit of the proposed explorationwork program, along with the technical and financial competence of the applicant to undertake the proposed work. Further information on the selection criteria and assessment process, including an application checklist is available at

Exploration permits are issued for an initial six year term and in most circumstances may be renewed for two further terms of five years. At each renewal 50 percent of the permit area must be relinquished. Special provisions apply to permits with six or fewer graticular blocks and permits of only one block cannot be renewed.

If a discovery is made and a location is successfully declared over a petroleum discovery, then blocks which the discovery covers will be exempt from the 50per cent relinquishment requirement (see below for further information regarding discoveries).

Cash Bidding

The OPGGSA also provides for a cash bidding system. InNovember 2012, the Australian Government announced its decision to incorporate cash bidding into the offshore petroleum acreage release from 2014 onwards. Acashbidding system will be used to allocate offshore petroleum acreage in mature areas or areas containing known petroleum accumulations. The existing work program bidding system will be maintained for all other areas.

The Government is currently reviewing policy and administration pertaining to cash bidding and will consulting with industry on the proposed changes. Furthernews on the process will be advised through theAustralian Petroleum News enewsletter.

Cash bidding is expected to prevent over-exploration in areas where none or little may be required and ensures the release of these areas is equitable, economic and efficient. The Government recognises that in a global context, most of Australia’s petroleum basins have been lightly explored and for these areas the existing work program bidding system will continue.

Discovery of Petroleum

A petroleum pool is defined as a naturally occurring, discrete accumulation of petroleum. Within 30 days of finding a petroleum pool in a permit area, the titleholder must give written notification to NOPTA detailing the graticular block(s) that contain the discovery.

Notification of the discovery is the first step; the second step is submitting an application for the declarationof a location over the block(s) within the permit that cover the discovery, which is required prior to applying for a production licence or retention lease. The Declaration of a Location is a Joint Authority decision.

A location is not a petroleum title and is attached to the underlying exploration permit. During the life of the location, exploration activity continues within the permit in accordance with the exploration title work program and conditions. As knowledge about the discovery improves, the titleholder may apply to add a block to the location, or to revoke the location if the discovery is considered to be non-commercial. It is also important to note that if a location is granted, a production licence or retention lease must be applied for within two years, or up to four years in special circumstances. If this does not occur, the block(s) within the location are removed from the permit on expiry of the two (or four) year location period. Those blocks return to open acreage at that time.

Retention Leases and Production, Infrastructure and Pipeline Licences

If the discovery is considered by the titleholder to be commercial, they may apply for a production licence. The titleholder has two years after the declaration of a location (or a possible further two years in special circumstances) in which to apply for a production licence. The application must provide details of all potential development proposals for the area, including domestic gas development. Once granted, a licence may be terminated if no production occurs for a continuous period of at least five years. Where production facilities require a pipeline to transport petroleum to shore or to other facilities, a pipeline licence may be granted. This licence has an indefinite term but may be terminated if no construction occurs or the pipeline is not used for a continuous period of at least five years.

An infrastructure licence is only required in certain circumstances and enables a company to carry out specific petroleum activities at an offshore facility, such as conversion of gas to Liquefied Natural Gas or methanol. It also allows a company to construct and operate offshore infrastructure which lies outside the production licence area or which are held under a different ownership structure to the underlying production licence.

If a titleholder makes a non-commercial discovery that is assessed as likely to become commercially viable within the next 15 years, an application for a retention lease may be made. The titleholder has two years after the declaration of a location (or a possible further two years in special circumstances) in which to apply for a retention lease. The application mustprovide a thorough assessment of the commercial prospects ofall potential development concepts and outline work and expenditure commitments to address the identified barriers to commerciality.