Western Australian Consolidated Acts Western Australian Consolidated Acts[s. 3]
[Heading amended by No. 19 of 2010
s. 4.]
THIS AGREEMENT is made the 8th day of November 1985,
BETWEEN
THE HONOURABLE BRIAN THOMAS BURKE, M.L.A., Premier of the State of Western
Australia, acting for and on behalf of the said State and its
instrumentalities from time to time (hereinafter called “the
State”) of the first part
AND
WEST AUSTRALIAN PETROLEUM PTY. LIMITED a company incorporated in the State of
Western Australia and having its principal place of business in the State of
Western Australia at 233 Adelaide Terrace, Perth (hereinafter called
“the Lessee”) of the other part
WHEREAS:
(a) The Lessee is the holder of a petroleum lease
granted under the former provisions of the Petroleum Act 1936 registered
as Petroleum Lease Number 1H (hereinafter called “the Barrow Island
Lease”).
(b) The State and the Lessee have agreed to new
arrangements to replace for the term of the Barrow Island Lease the royalty
payable under the Barrow Island Lease (and Commonwealth excise on the
production of petroleum from the Barrow Island Lease) and desire to vary
Barrow Island Lease in the manner hereinafter set out.
NOW THIS AGREEMENT WITNESSETH: —
Definitions 3
1. In this Agreement (and in the Barrow Island
Lease) subject to the context: —
“advise”, “apply”,
“approve”, “approval”, “consent”,
“certify”, “direct”, “notify”,
“request” or “require” means advise, apply, approve,
approval, consent, certify, direct, notify, request, or require in writing as
the case may be and any inflexion or derivation of any of those words has a
corresponding meaning;
“accumulated nett value of a petroleum
commodity” in relation to the production unit, in respect of a royalty
year is an amount calculated in accordance with the formula —
Where —
NV = the nett value of a petroleum commodity in
the royalty year in respect of which the assessment is being made,
R = the accumulation rate,
A = the accumulated nett value at the end of the
preceding royalty year,
For the 12 month period ending 30th June 1985
the accumulated nett value is deemed to be zero for the purpose of calculating
the accumulated nett value in respect of all subsequent royalty years.
If the accumulated nett value in respect of the
production unit at the end of a royalty year is positive, it shall be deemed
to be zero for purposes of calculating the accumulated nett value in respect
of subsequent royalty years;
“accumulation rate” in relation to the
production unit in respect of a royalty year is a percentum per annum equal to
the threshold rate defined in the Commonwealth legislation relating to the
resource rent tax applying to offshore petroleum projects, or in the absence
of such legislation is the maximum threshold rate determined in accordance
with the “threshold rate” as defined in Schedule 1 to the
Petroleum Revenue Act 1985 of the Commonwealth but, if and at such time
or times as it becomes necessary to calculate the accumulation rate for the
purpose of calculating accumulated nett value of a petroleum commodity in
respect of a royalty year, either party to this Agreement considers the rate
as mentioned above to be inappropriate, then the accumulation rate shall be
the percentum per annum as agreed between the Minister and the Lessee and
failing agreement within such period as the Minister allows it shall be such
percentum per annum determined by arbitration in accordance with
paragraph (g) of clause 21 of the Barrow Island Lease as represents
a reasonable and appropriate return on the investment to which the
accumulation rate is to be applied taking into account: —
(a) the
cost of equity funds commonly applicable to investments for the exploration
for and recovery of petroleum in Australia;
(b) the
cost of loan funds commonly applicable to loans for the purpose of financing
investment in the exploration for and recovery of petroleum in Australia;
(c)
rates of discount commonly used to evaluate investments for the exploration
for and recovery of petroleum in Australia;
(d) the
nature and size of anticipated investments for the exploration for and
recovery of petroleum from the Barrow Island Lease, and the extent to which
the risk associated with such investments differs from other investments for
the exploration for and recovery of petroleum in Australia; and
“active operation”, in relation to the
production unit means the operation of that unit for the production of a
petroleum commodity from petroleum from the Barrow Island Lease;
“approved” means approved by the
Minister;
“authorised person” means a person
appointed by the Minister to be an authorised person;
“Barrow Island Lease” means the
petroleum lease dated 27th February, 1967 granted under the former provisions
and registered as Number 1H and includes any renewal, substitution or
variation thereto and according to the requirements of the context shall
describe the area of land demised as well as the instrument by which it is
demised;
“clause” means a Clause of the
Agreement;
“commencement date” means the date on
which the provisions of this Agreement other than clauses 1, 2 and 3 come
into operation pursuant to clause 4;
“Commonwealth” means the Commonwealth
of Australia and includes the Government for the time being thereof;
“eligible administration expenditures”
in relation to the production unit in respect of a royalty year,
means —
(a)
expenditure paid in that royalty year which the Lessee demonstrates to the
satisfaction of the Minister was reasonably and properly paid by the Lessee
for administration in the State of the production unit in respect
of —
(i)
accounting and auditing fees directly and solely related
to the active operation of the production unit, other than those directly
attributable to or necessitated by the resolution of any dispute between the
parties arising under the Barrow Island Lease;
(ii)
legal fees directly and solely associated with the active
operation of the production unit, other than those directly attributable to
royalty matters;
(iii)
salaries, allowances, employer contributions to
superannuation schemes allowed as deductions from time to time under the
Income Tax Assessment Act 1936 , or any other Act of the Parliament of
the Commonwealth replacing that Act, payroll tax and wages of employees
attributable to administration of the production unit but limited to the
proportion of their hours of duty during which they were engaged directly and
solely in the administration of the production unit; and
(iv)
office expenses directly and solely associated with the
active operation of the production unit;
(b)
other expenditures paid in that royalty year (including overhead and indirect
costs of rendering services to the Lessee) which the Lessee demonstrates to
the satisfaction of the Minister were reasonably and properly paid in that
royalty year for the proper administration of the production unit;
Provided That the provisions of
paragraphs (g) and (gb) of Clause 21 of the Barrow Island Lease
shall not apply to any dispute arising out of the exercise of any discretion,
whether express or implied, conferred upon the Minister pursuant to this
definition, but this provision shall not limit the other rights and remedies
of the parties;
“eligible capital expenditures” in
relation to the production unit in respect of a royalty year, means
expenditures paid in that royalty year which were reasonably and properly paid
by the Lessee directly and solely for the production of a petroleum commodity
solely from petroleum from the Barrow Island Lease in respect
of —
(a)
feasibility studies;
(b)
studies and investigations required by or under a law in force in Western
Australia to be carried out;
(c)
drilling and equipment of production, injection, disposal, water source and
observation wells;
(d)
design, acquisition, installation and construction of —
(i)
plant for stabilisation of crude oil and separation of
gas liquids;
(ii)
storage facilities;
(iii)
water storage and supply;
(iv)
electricity generation and reticulation;
(v)
communication facilities;
(vi)
transport and pipeline facilities;
(vii)
accommodation and welfare facilities at the production
unit;
(viii)
enhanced recovery facilities; and
(ix)
other facilities which the Lessee demonstrates to the
satisfaction of the Minister are reasonably and properly required for the
operation of the production unit;
together with the
value of any capital assets, including plant and equipment, purchased by the
Lessee after 30th June 1985 and transferred to the production unit and used
directly and solely in relation to the production unit (where the value is the
amount as agreed between the Minister and the Lessee to be the value of the
capital assets, or in the absence of such an agreement is such an amount
determined by the Minister taking account of those criteria numbered 1 to 8
inclusive set out in paragraph (i) of the definition of “eligible
deduction” which may be relevant) less the amount of any other
deductions allowed by the State in respect thereof, whether under this
Agreement or in assessing any other royalty paid to the State;
“eligible
deduction” in relation to the production unit in respect of a royalty
year, means an amount equal to the sum of the following eligible expenditures
in that royalty year, where an amount claimed may not include expenditure
deducted in a previous royalty year —
(a)
eligible enhanced recovery research expenditure;
(b)
eligible exploration expenditure;
(c)
eligible operating expenditure;
(d)
eligible capital expenditure;
(e)
eligible administration expenditure;
(f)
eligible rehabilitation and well abandonment expenditure;
(g) such
other expenditure as the Minister may allow as an eligible deduction pursuant
to paragraphs (c) and (d) of subclause 2(6) of the Barrow Island
Lease or which the lessee demonstrates to the satisfaction of the Minister was
reasonably and properly paid directly and solely in respect of the production
of a petroleum commodity solely from petroleum from the Barrow Island Lease,
Provided That the provisions of paragraphs (g) and (gb) of clause 21
of the Barrow Island Lease shall not apply to any dispute arising out of the
exercise of any discretion, whether express or implied, conferred upon the
Minister pursuant to paragraph (g) of this definition, but this provision
shall not limit the other rights or remedies of the parties;
less the sum of —
(i)
value of capital assets, including plant and equipment,
sold or removed without sale from the production unit in that royalty year
(other than capital assets included in and as part of a bona fide sale or
transfer of the Barrow Island Lease or a direct or indirect interest in that
Lease) for a purpose other than repair and maintenance, where the value is the
amount as agreed between the Minister and the Lessee to be the market value of
the asset, or in the absence of such an agreement is such an amount as
determined by the Minister to be the market value, taking account of, where
relevant —
1. the gross proceeds
from the sale or disposal of the capital asset;
2. the age and
condition of the capital asset;
3. the characteristics
of the market in which it was sold or disposed of;
4. the terms of
relevant contracts or sales agreements;
5. prices received
elsewhere in comparable arms length transactions;
6. the point of sale;
7. the cost of
transporting the capital asset to the point of sale; and
8. such other relevant
matters as the Minister thinks fit;
but excludes the value
of those capital assets which were in place on the production unit as at 30th
June 1985 and were so sold or removed without sale from the production unit at
a later date except to the extent that such value has resulted from
expenditure on extensions, improvements and refurbishment of such assets after
30th June 1985 and except to the extent that expenditures on such assets have
been deducted under the former clause 2 of the Barrow Island Lease, with
such value limited as determined above calculated as agreed between the Lessee
and the Minister or, in the absence of agreement within such period as the
Minister allows, as determined by the Minister;
(ii)
value of services provided by the production unit in that
royalty year not directly connected with the active operation of the
production unit for the production of petroleum from the Barrow Island Lease,
including the lease or hire of plant and equipment and other capital assets
and the provision of accommodation and catering, transportation and petroleum
storage services, where the value is the amount as agreed between the Minister
and the Lessee to be the value of the services provided, or in the absence of
agreement, is such amount as determined by the Minister;
(iii)
any amount received by the Lessee in that royalty year by
way of compensation, insurance or indemnity for or in respect of any loss or
destruction of capital assets used in the operation of the production unit,
including plant and equipment other than an amount by way of compensation,
insurance or indemnity taken into account elsewhere in the calculation of nett
value of a petroleum commodity;
(iv)
the value of any information sold by the Lessee relating
to the production unit, (other than information included in and as part of a
bona fide sale or transfer of the Barrow Island Lease or a direct or indirect
interest in that Lease) where the value is the amount as agreed between the
Minister and the Lessee to be the value of the information, or in the absence
of agreement is such amount as determined by the Minister;
(v)
any amount received by the Lessee as a refund of any
category of eligible expenditures mentioned in paragraphs (a) to (g)
inclusive of this definition;
(vi)
any other like charge or payment received by the Lessee
in respect of the production unit;
Provided That expenditures on capital assets,
services or other items referred to in paragraphs (i) to (vi) inclusive
of this definition are allowable, have been allowed or would have been allowed
if expended after this Agreement came into effect, under one of the categories
of eligible expenditures mentioned in paragraphs (a) to (g) of this
definition,
but eligible deduction does not include
A interest or an
amount in lieu of interest, and loan service fees paid on funds borrowed to
finance the operation of the production unit and repayments of principal of
such borrowings,
B dividends, bonus
share issues or equity capital payments or repayments,
C depreciation and
amortisation allowances,
D petroleum royalty
paid under the Barrow Island Lease,
E taxes on profit or
income,
F Commonwealth duties
of customs and excise or other like levies on the production or export of
petroleum from the Barrow Island Lease, and
G payments in the
nature of a royalty, override royalty or any other payment considered by the
Minister to be a levy on petroleum output or value, other than those levied by
or payable to the Commonwealth or the State;
“eligible
enhanced recovery research expenditure” in relation to the production
unit in respect of a royalty year means expenditure paid in that royalty year
directly and solely in relation to the production unit which in the opinion of
the Minister was reasonably and properly paid by the Lessee for research into
methods designed directly to improve the rate and amount of recovery of
petroleum from the Barrow Island Lease, Provided That the provisions of
paragraphs (g) and (gb) of clause 21 of the Barrow Island Lease
shall not apply to any dispute arising out of the exercise of any discretion,
whether express or implied, conferred upon the Minister pursuant to this
definition, but this provision shall not limit the other rights and remedies
of the parties;
“eligible
exploration expenditure” in relation to the production unit in respect
of a royalty year means expenditure paid in that royalty year which was
reasonably and properly paid by the Lessee directly and solely in respect of
the exploration for or the determining of the existence, location, extent,
quality or occurrence of petroleum in the Barrow Island Lease, and includes
geological and geophysical surveys and exploration, development and appraisal
drilling, and for the 1985-86 royalty year only, includes expenditure paid in
the financial year ended 30th June 1985 in respect of exploration,
development and appraisal drilling programmes for “new” oil and
“substantial new development” oil and for the equipment of
production wells drilled in accordance with those programmes;
“eligible
operating expenditure” in relation to the production unit in respect of
a royalty year means expenditure paid in that royalty year which was
reasonably and properly paid by the Lessee and is directly and solely
attributed to the production or the maintenance of production of a petroleum
commodity from the production unit;
“eligible
rehabilitation and well abandonment expenditure” in relation to the
production unit in respect of a royalty year means expenditure paid in that
royalty year which was reasonably and properly paid by the Lessee directly for
rehabilitation of the land, water or environment comprised in or contiguous to
the production unit, or in closing and making safe or removing for the
purposes of rehabilitation, facilities reasonably and properly required for
the production of a saleable petroleum commodity solely from petroleum from
the Barrow Island Lease and, in the case only of final abandonment of active
operations on the Barrow Island Lease in accordance with programmes approved
in advance by the Minister, Provided That the provisions of
paragraphs (g) and (gb) of clause 21 of the Barrow Island Lease
shall not apply to any dispute arising out of the exercise of any discretion,
whether express or implied, conferred upon the Minister pursuant to this
definition, but this provision shall not limit the other rights and remedies
of the parties;
“former
provisions” means the provisions of the Petroleum Act 1936 which,
by force of section 134 of the Petroleum Act are deemed to subsist and
enure in their application to or in relation to the Barrow Island Lease;
“f.o.b.
valuation and measurement point” for any petroleum commodity sold or
removed without sale from the production unit means such valve station or
other point as is agreed between the Lessee and the Minister, or in the
absence of agreement within such period as the Minister allows, such a valve
station or other point as is determined by the Minister as being that f.o.b.
valuation and measurement point;
“Lessee”
includes the Lessee and its successors and permitted assigns and appointees.
Where there is more than one Lessee their liability shall be several;
“Minister”
means the Minister for the time being charged with the administration of the
Petroleum Act, acting for and on behalf of the State;
“month”
means calendar month;
“nett value of a
petroleum commodity” in relation to the production unit in respect of a
royalty year means the amount (which may be a negative amount) in that royalty
year that is the sum of —
(a) the
value of all petroleum commodities produced solely from petroleum from the
Barrow Island Lease and sold or removed without sale from the production unit
in that royalty year, but excluding the value of any petroleum commodity which
is flared or vented with the approval of the Minister or which is used by the
Lessee for the purposes of active operations of the production unit or which
is otherwise lost,
(b) the
value of that proportion of all petroleum commodities produced partly from
petroleum from the Barrow Island Lease and partly from other petroleum which
is agreed between the Lessee and the Minister to be attributable to petroleum
from the Barrow Island Lease or, in the absence of agreement within such
period as the Minister allows, the value reasonably attributed to petroleum
from the Barrow Island Lease by the Minister, taking account of the quantity
of petroleum entering the production unit, as measured at a measurement point
or points approved by the Minister, and
(c) any
amount received by way of insurance or indemnity for or in respect of any loss
of a petroleum commodity produced from the production unit from petroleum from
the Barrow Island Lease, which, if the loss had not occurred, would have been
taken into account in calculating the value of that production commodity,
as reduced by the sum
of “eligible deductions”;
“notice”
means notice in writing;
“person”
or “persons” includes bodies corporate;
“petroleum” means: —
(a) any
naturally occurring hydrocarbon, whether in a gaseous, liquid or solid state;
(b) any
naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or
solid state; or
(c) any
naturally occurring mixture of one or more hydrocarbons, whether in a gaseous,
liquid or solid state, and one or more of the following, that is to say,
hydrogen sulphide, nitrogen, helium and carbon dioxide,
and includes any
petroleum as defined by paragraphs (a), (b) or (c) of this definition
that has been returned to a natural reservoir but excludes oil shale;
“
Petroleum Act” means the Petroleum Act 1967 ;
“petroleum
commodity” means petroleum or a substance derived from petroleum at any
stage of treatment of that petroleum up to the time that it has first become a
saleable petroleum commodity, and includes a saleable petroleum commodity;
“production
unit” means the Barrow Island Lease together with those facilities
reasonably and properly required for the production of a saleable petroleum
commodity from petroleum from the Barrow Island Lease, including without
limitation the tanker-loading pipeline from the Barrow Island Lease and the
associated mooring facilities;
“quantity of a
petroleum commodity sold or removed without sale” from the production
unit, in respect of a royalty year means —
(a) the
quantity measured during that royalty year by a measuring procedure approved
by the Minister and performed at the f.o.b. valuation and measurement point or
such other places as the Minister approves; or
(b)
where no such measuring procedure is so performed, or the Minister is not
satisfied that the quantity of a petroleum commodity removed by the Lessee as
been properly and accurately measured, the quantity determined by the
Minister;
“records”
include —
(a)
production statistics, accounts, account books or accounting records;
(b)
contracts;
(c)
sales and exchange agreements; and
(d)
petroleum reserve estimates and production projections;
however compiled,
recorded or stored;
“royalty
year” means initially, the six-month period from 1st July 1985 to 31st
December 1985, and thereafter the twelve month period from 1st January in one
calendar year to 31st December of the same calendar year, unless otherwise
agreed;
“saleable
petroleum commodity” means petroleum treated to an extent that is, in
the opinion of the Minister, the minimum treatment necessary to enable that
petroleum to be sold commercially, having regard to the nature and location of
the petroleum, the production unit and the market;
“sold”
means that title to the subject matter of the sale has passed from the seller
to the buyer and payment has been received;
“State”
means the State of Western Australia;
“the
Agreement”, “this Agreement”, “hereof” and
“hereunder” refer to this Agreement whether in its original form
or as from time to time added to, varied or amended;
“value of a
petroleum commodity” means —
(a) the
gross proceeds realised upon sale of that petroleum commodity, less any coats
paid for the transportation of that commodity from the f.o.b. valuation and
measurement point to the point of sale if, in the opinion of the Minister, the
resulting amount represents the fair and reasonable market value of the
petroleum commodity when sold on an arm’s length basis; or
(b) in
any case not covered by paragraph (a) of this definition, the market
value agreed between the Lessee and the Minister for that petroleum commodity
at the f.o.b. valuation and measurement point or, in the absence of agreement
within such period as the Minister allows, the market value as determined by
the Minister at the f.o.b. valuation and measurement point, taking account
of —
(i)
the gross proceeds from the sale or disposal of the
petroleum commodity;
(ii)
the quality and quantity of the petroleum commodity;
(iii)
the characteristics of the market;
(iv)
the terms of similar relevant contracts or sales
agreements and the quantities specified therein;
(v)
the state of the petroleum market at the time the prices
in the contract or sales agreement were set;
(vi)
the provisions of the contract or sales agreement
relating to variation or renegotiations of prices;
(vii)
prices received by producers elsewhere in arm’s
length transactions;
(viii)
the point of sale;
(ix)
the cost of transporting the petroleum commodity from the
f.o.b. valuation and measurement point to the point of sale;
(x)
petroleum transportation costs incurred in other similar
arms length transactions
(xi)
any prevailing petroleum commodity pricing policy or law
of the Commonwealth or the State (including the policy of the Commonwealth on
import parity pricing of crude oil recovered in Australia); and
(xii)
such other relevant matters as the Minister thinks fit;
Provided That the
provisions of paragraphs (g) and (gb) of clause 21 of the Barrow
Island Lease shall not apply to any dispute arising out of the exercise of any
discretion, whether express or implied, conferred upon the Minister pursuant
to this definition, but this provision shall not limit the other rights and
remedies of the parties.
Interpretation 3
2. In this Agreement: —
(a)
monetary references are references to Australian currency unless otherwise
specifically expressed;
(b)
marginal notes do not affect the interpretation or construction 3 ;
(c)
reference to an Act unless otherwise specifically expressed includes the
amendments to that Act for the time being in force and also any Act passed in
substitution therefor or in lieu thereof and the regulations for the time in
force thereunder; and
(d)
where any provision of the Barrow Island Lease is inconsistent with any
provision of this Agreement, this Agreement shall prevail and the Barrow
Island Lease shall to the extent of the inconsistency be invalid.
State to Sponsor Bill 3
3. The State shall introduce and sponsor a Bill in
the Parliament of Western Australia to ratify this Agreement and endeavour to
secure its passage and coming into operation as an Act prior to 31st December
1985.
Operation of Agreement 3
4. The provisions of this Agreement other than
Clauses 1, 2 and 3 shall not come into operation unless and
until —
(a) the
Bill mentioned in Clause 3 comes into operation as an Act;
(b) the
Lessee certifies to the State not later than 30th June 1986 that:
(i)
Commonwealth legislation which is satisfactory to the
Lessee has come into operation and all of the necessary acts, matters, and
things have been done under that legislation to exempt petroleum commodities
produced from the production unit from petroleum from the Barrow Island Lease
from duties of excise of the Commonwealth with effect from 1st July 1985;
(ii)
the Lessee has made arrangements satisfactory to it with
the Commonwealth for a refund of any duties of excise paid on petroleum
produced from the production unit from petroleum from the Barrow Island Lease
on or after 1st July 1985; and
(iii)
The agreement, arrangement or understanding between the
State and the Commonwealth mentioned in Clause 9, so far as it affects
the Lessee, is satisfactory to it; and
(c) the
State certifies to the Lessee not later than 30th June 1986 that:
(i)
it has entered into an agreement with the Commonwealth
for the sharing with the Commonwealth of the royalty payable under the Barrow
Island Lease; and
(ii)
Commonwealth legislation which is satisfactory to the
State has come into operation for the exemption of petroleum commodities
produced from the production unit from petroleum from the Barrow Island Lease
from duties of excise of the Commonwealth with effect from 1st July 1985.
Transitional Arrangements 3
5. (a)
All petroleum commodities produced from the production unit from petroleum
from the Barrow Island Lease and held in stock on the production unit as at
midnight on 30th June 1985 shall be subject to the provisions of the former
Clause 2 of the Barrow Island Lease as though that Clause was still in
force. For the purpose of paragraph (b) of this clause 5 the interim
royalty payable with respect to that petroleum in stock shall be the royalty
paid by the Lessee to the State with respect to that petroleum upon its sale
or removal without sale from the Barrow Island Lease, as agreed between the
Minister and the Lessee or, in default of agreement within such period as the
Minister allows, as determined by the Minister. Within 3 months after the
commencement date the Lessee shall file with the Minister an audited royalty
return for the period from 1st January 1985 to 30th June 1985 in accordance
with the provisions of the former Clause 2 of the Barrow Island Lease and
the Minister shall within 3 months after the receipt of that return
determine the amount of the royalty actually payable with respect to that
petroleum in stock. Any amount of royalty found to be overpaid or owing shall
be refunded or paid, as the case may be within one month of that
determination. Any determination by the Minister of the royalty payable on
gross value of all petroleum commodities held in stock on the production unit
as at midnight on 30th June 1985 shall be deemed to be a decision made under
the Barrow Island Lease and shall be subject to the provisions of
paragraphs (g), (ga) and (gb) of clause 21;
(b)
Within 14 days of the commencement date, the State shall refund to the
Lessee an amount equivalent to the sum of all those payments made by the
Lessee prior to the commencement date which were made on account of royalty in
respect of petroleum recovered from the Barrow Island Lease and sold or
removed without sale from the production unit between 30th June 1985 and the
commencement date, less the amount of interim royalty payable by the Lessee
under paragraph (a) of this Clause 5.
Amendments of Lease 3
6. The Barrow Island Lease is hereby varied with
effect from 1st July 1985 as follows: —
(1) by deleting
Clause 2 and substituting the following Clauses: —
“ 2. IMPOSITION
AND ASSESSMENT OF ROYALTY
2(1) DEFINITIONS
For the purpose of
Clauses 2 and 2A of this lease, and subject to the context, the terms and
expressions set out in Clause 1 of the Agreement shall have the meanings
therein ascribed.
2(2) OBLIGATION TO PAY
ROYALTY
The Lessee shall with
effect from 1st July 1985 and during the continuance of this lease pay to the
State a royalty in respect of petroleum recovered by the Lessee from the
Barrow Island Lease.
2(3) BASIS OF
CALCULATION OF ROYALTY
The royalty shall be
calculated by reference to all petroleum commodities produced from the
production unit in a royalty year from petroleum from the Barrow Island Lease.
2(4) AMOUNT OF ROYALTY
The royalty payable
under subclause 2(2) is 40% of the accumulated nett value of a petroleum
commodity sold or removed without sale from the production unit in a royalty
year in respect of the production unit, Provided That if this calculation
yields a negative number the royalty payable is nil, but no royalty shall be
payable under this Subclause 2(4) in respect of those petroleum
commodities held in stock on the production unit as at midnight on 30th June
1985 and on which interim royalty has been paid under paragraph (a) of
Clause 5 of the Agreement and the nett value of those petroleum
commodities shall be as agreed between the Minister and the Lessee or, in
default of agreement within such period as the Minister allows, as determined
by the Minister.
2(5) ROYALTY RETURN
(a) The
Lessee shall, within three months after the expiration of a royalty year or
such longer period as the Minister in writing allows, deliver to the Minister
or to such other person as the Minister may direct a detailed statement
relating to the production unit, containing or indicating —
(i)
the name and description of the production unit;
(ii)
the name and address, of each Lessee in respect of the
production unit;
(iii)
the quantity of a petroleum commodity sold or removed
without sale from the production unit during the royalty year;
(iv)
the name and address of the refinery or person to which a
petroleum commodity recovered was sent;
(v)
the name and address of any person with an interest in
the production unit;
(vi)
the value and the basis of valuation of a petroleum
commodity sold or removed without sale from the production unit;
(vii)
details of all sales or shipments of a petroleum
commodity from the production unit;
(viii)
details of all contracts and sale or exchange agreements
relating to a petroleum commodity obtained from the production unit; and
(ix)
such other relevant information as the Minister requires.
(b) A
statement referred to in paragraph (a) of this subclause 2(5) shall,
in addition to the matters required under that paragraph to be contained or
indicated, contain —
(i)
details of all expenditure claimed as eligible deductions
in calculating nett value;
(ii)
by way of summary, a calculation of nett value;
(iii)
by way of summary, a calculation of accumulated nett
value; and
(iv)
an estimate of the royalty payable.
(c) The
statement required under paragraph (a) of this subclause 2(5)
shall —
(i)
be in an approved form and signed by the Lessee or a
person given full representative authority by the Lessee; and
(ii)
be supported by statutory declaration given by a duly
authorised officer of the Lessee and accompanied by written advice by an
auditor approved by the Minister certifying that in his opinion, the statement
has been correctly completed in accordance with the provisions of this lease,
and expressing an opinion, on grounds to be stated by him, as to whether all
expenditures have been reasonably and properly paid for the purposes mentioned
in this lease, and stating all interpretations of the provisions of this lease
by the Lessee that materially affect the amount of royalty payable.
(d) If a
statement is delivered after the date provided in paragraph (a) of this
subclause 2(5), the Lessee shall be liable to pay an amount of royalty
additional to that specified in a notice of assessment under
subclause 2(15) with such additional amount to be calculated by applying
an annual rate of interest equal to the accumulation rate to the amount
specified in such notice as being the balance of royalty due to the State for
the period for which the statement is overdue.
(e) The
provisions of paragraphs (g) and (gb) of clause 21 of the Barrow
Island Lease shall not apply to any dispute arising out of the exercise of any
discretion, whether express or implied, conferred upon the Minister pursuant
to this subclause 2(5), but this paragraph shall not limit the other
rights and remedies of the parties.
2(6) ALLOCATION OF
EXPENDITURES
(a) A
particular expenditure is not to be included in more than one category of
eligible expenditure in calculating the royalty payable by the Lessee.
(b) The
Minister may determine in accordance with the provisions of this lease the
extent to which a particular expenditure is to be attributed to a particular
category of eligible expenditure in calculating the royalty payable by the
Lessee, and upon his so determining, that particular expenditure shall be
attributed accordingly.
(c)
Where any expenditure paid by the Lessee in a royalty year in respect of
activities or facilities of the Lessee on or in relation to the production
unit is, in the opinion of the Minister, directly but not solely related to
the production of a petroleum commodity from petroleum from the Barrow Island
Lease but that expenditure would otherwise be an eligible expenditure, the
Minister shall, for the purpose of calculating the royalty payable by the
Lessee, allow as an eligible deduction such portion of that expenditure as he
thinks fit.
(d)
Where any expenditure paid by the Lessee in a royalty year in respect of
activities or facilities of the Lessee on or in relation to the production
unit is, in the opinion of the Minister, related to the production of a
petroleum commodity not solely from petroleum from the Barrow Island Lease but
that expenditure would otherwise be an eligible expenditure, the Minister
shall, for the purpose of calculating the royalty parable by the Lessee, allow
as an eligible deduction such portion of that expenditure as he thinks fit.
(e) The
provisions of paragraphs (g) and (gb) of clause 21 of the Barrow
Island Lease shall not apply to any dispute arising out of the exercise of any
discretion, whether express or implied, conferred upon the Minister pursuant
to this subclause 2(6), but this paragraph shall not limit the other
rights and remedies of the parties.
2(7) INFORMATION TO BE
SUPPLIED
The Lessee
shall —
(a)
within 30 days of the ratification of this Agreement notify the Minister
of the name and address of the manager of the production unit or of some other
person to whom notices required to be given under this lease may be given;
(b)
within 30 days after the occurrence of any of the following events notify
the Minister —
(i)
of every change in the name or address, or both, of the
manager of the production unit or other person referred to in
paragraph (a) of this subclause 2(7);
(ii)
subject to Clause 9 of this Lease, of a change in
the ownership of the production unit or of the Barrow Island Lease;
(iii)
of a significant change in the level of production of a
petroleum commodity by the production unit;
(iv)
of a discontinuance of active operations; and
(v)
of a recommencement of active operations after
discontinuance;
(c)
within 30 days of a request by the Minister for further information
relating to a statement under subclause 2(5), supply such information to
the Minister.
2(8) APPOINTMENT OF
AUTHORISED PERSON
The Minister may, by
writing signed by him, appoint a person to be an authorised person for the
purposes of this lease.
2(9) INSPECTION OF
STOCK AND RECORDS
(a) For
the purposes of this lease, an authorised person may, at reasonable
times —
(i)
enter the production unit or part thereof;
(ii)
enter premises occupied by the Lessee where there is
stored, or where the authorised person has reasonable cause to believe is
stored, a petroleum commodity in respect of which royalty is or has been or,
in his opinion, is likely to be payable under this lease;
(iii)
enter premises occupied by the Lessee where there are, or
where he has reasonable cause to believe are kept, records relating to the
recovery, processing, storage or sale or other disposal of a petroleum
commodity which has been recovered under the Barrow Island Lease;
(iv)
inspect or take stock of a petroleum commodity;
(v)
inspect the active operation of the production unit;
(vi)
inspect the records relating to the drilling, extraction,
processing, storage or sale or other disposal of a petroleum commodity
recovered from the production unit;
(vii)
inspect the records relating to any other petroleum
commodity which may have passed through the production unit; and
(viii)
where he has reasonable cause to believe that a person in
the production unit or on those premises has information relevant to the
authorised person’s inspection, require the person to furnish to the
authorised person his name and position and to answer questions put to him
relating to that information.
(b) An
authorised person may make and retain copies of, or extracts from, the records
inspected by him under this subclause 2(9).
(c) The
occupier or person in charge of a production unit or part of a production
unit, or of premises referred to in subparagraphs (a)(ii) or (iii) of
this subclause 2(9) shall provide an authorised person with all
reasonable assistance for the effective exercise of the authorised
person’s powers under this subclause, other than transport to and from
the production unit.
(d) The
provisions of paragraphs (g) and (gb) of clause 21 of the Barrow
Island Lease shall not apply to any dispute arising out of the exercise of any
discretion, whether express or implied, conferred upon the State or the
Minister pursuant to this subclause 2(9), but this paragraph shall not limit
the other rights and remedies of the parties.
2(10) PROPER BOOKS AND
RECORDS TO BE KEPT
(a) The
Lessee shall keep and maintain at the production unit, or at some other place
agreed between the Lessee and the Minister or, in the absence of agreement, as
determined by the Minister, proper records as described in subclause 2(9)
and proper books of account showing in respect of the production
unit —
(i)
the amount and particulars of each expenditure in each
category of eligible deduction;
(ii)
details of all sales, transfers and other disposals of
assets, being assets the cost of which has been included in calculating
eligible capital expenditure;
(iii)
details of the quantity and quality of a petroleum
commodity removed from the production unit as measured at the f.o.b. valuation
and measurement point, and details of sales, shipments, transfers and other
disposals of a petroleum commodity to and from the production unit, including
the time, destination, value and basis of valuation and quantity and quality
of each sale, shipment, transfer or other disposal; and
(iv)
details of all assets, being assets the cost of which has
been included in calculating eligible capital expenditure, eligible
exploration expenditure and eligible enhanced recovery research expenditure.
(b) A
petroleum commodity shall not be sold or removed from the production unit, or
treated in a processing plant not included in the production unit, until its
quantity and quality have been ascertained and entered in a book of account
referred to in paragraph (a) of this subclause 2(10).
2(11) ASSESSMENT
From the statement
required to be delivered under subclause 2(5) and from any other
information in his possession, whether or not obtained under this lease, the
Minister shall make an assessment consistent with the provisions of this lease
of the accumulated nett value, and the royalty payable by the Lessee, in
respect of the royalty year to which that statement relates.
In addition to the
assessment of the accumulated nett value, and the royalty payable by the
Lessee, the notice of assessment served on the Lessee in accordance with
subclause 2(15) shall also indicate the basis of the assessment made by
the Minister, the provisional royalty payments for the year made by the Lessee
in accordance with paragraph (a) of subclause 2A(2) and the balance
of royalty due to the State or the refund due to the Lessee for royalty
over-payment.
2(12) DEFAULT
ASSESSMENT
If —
(a) the
Lessee makes default in delivering a statement referred to in
subclause 2(5) or
(b) the
Lessee makes default by not keeping proper books of account referred to in
subclause 2(10); or
(c) the
Minister is not satisfied that a statement delivered by the Lessee is a full
and accurate statement;
the Minister shall
promptly make an assessment consistent with the provisions of this lease of
the amount of accumulated nett value of a petroleum commodity sold or removed
without sale from the production unit in respect of which, in his opinion,
royalty ought to be levied, and that accumulated nett value shall be the
accumulated nett value in respect of which royalty shall be payable.
2(13) AMENDMENT OF
ASSESSMENT
(a)
Where the Lessee has not made to the Minister a full and true disclosure of
all the material facts necessary for the Minister’s assessment and, in
the Minister’s opinion, there has been an avoidance of royalty, the
Minister may —
(i)
where he is of the opinion that the avoidance of royalty
is due to fraud or evasion — at any time; and
(ii)
in any other case — within 7 years
after the date upon which the royalty became due and payable under the
assessment,
amend the assessment
by making such alterations or additions as he thinks fit to correct an error
in calculation or a mistake of fact, or to prevent avoidance of royalty, as
the case may be.
(b)
Where the Lessee has made to the Minister a full and true disclosure of all
the material facts necessary for the Minister’s assessment, and an
assessment is made after that disclosure, any consequential amendment of the
assessment varying the liability of the Lessee in any particular shall be made
to correct an error in calculation or a mistake of fact, and no such amendment
shall be made after the expiration of 7 years from the date upon which
the royalty became due and payable under that assessment.
(c)
Notwithstanding paragraphs (a) and (b) of this subclause 2(13),
where the assessment of nett value in respect of a royalty year includes an
estimate of a category of nett value of a petroleum commodity, the value of
which was not ascertainable at the end of that year, the Minister may, at any
time within 7 years after ascertaining the nett value of the petroleum
commodity, amend the assessment so as to ensure its completeness and accuracy
on the basis of that nett value and where an estimate of a category of nett
value of a petroleum commodity has been used, the Lessee shall provide final
figures with his next royalty return, after the figures have been finalised.
2(14) AMENDED
ASSESSMENT TO BE ASSESSMENT
An assessment amended
under subclause 2(13) shall be an assessment for the purposes of this
lease.
2(15) NOTICE OF
ASSESSMENT
Within three months of
receipt of the statement referred to in subclause 2(5) the Minister shall
serve a written notice of assessment on the Lessee or a person given full
representative authority by the Lessee.
2(16) VALIDITY OF
ASSESSMENT
The validity of an
assessment made under this lease shall not be affected by reason that a
provision of this lease has not been complied with by the Lessee.
2(17) EVIDENCE
The production of a
notice of assessment, or of a document under the hand of the Minister that
purports to be a copy of a notice of assessment, shall be conclusive evidence
of the making of the assessment and prima facie evidence that the amount and
all the particulars of the assessment are correct.
2A COLLECTION AND
RECOVERY OF ROYALTY
2A(1) WHEN ROYALTY
PAYABLE
Subject to this
Clause 2A royalty assessed by the Minister shall be due and payable by
the Lessee on the date specified in the notice of assessment under
subclause 2(15) as the date on which royalty is due and payable, being
not less than 30 days after service of the notice or, if no date is so
specified, on the thirtieth day after service of the notice.
2A(2) PAYMENT ON
ACCOUNT OF ROYALTY
The Lessee shall pay
on account of royalty —
(a) four
provisional royalty payments in respect of royalty payable under
subclause 2(4) for the three month periods ending 31st March, 30th June,
30th September and 31st December in each royalty year, each of which
payments shall be made no later than 23rd March, 23rd May, 23rd September
and 23rd December respectively in each royalty year, the amount of each
payment being equal to the royalty as estimated by the Lessee to be payable
under subclause 2(4) for the preceding three month periods ending 31st
December, 31st March, 30th June and 30th September respectively. In the 1985
royalty year the first provisional royalty payment shall be paid no later than
14 days after the commencement date. Each of the first four provisional
payments shall be $22.7 million;
(b)
where the sum of the four provisional payments referred to in
paragraph (a) of this subclause 2A(2) in respect of the
royalty year is less than 90% of the assessment under
subclauses 2(11), 2(12) and 2(13) of royalty payable, additional royalty
shall be paid of an amount calculated by applying a rate of interest equal to
the accumulation rate to the difference between the sum of the four
provisional royalty payments in respect of the royalty year and the assessment
under subclauses 2(11), 2(12) and 2(13) of royalty payable in respect of
the royalty year, and this lease shall apply to and in relation to that
additional royalty (except for the purpose of making a calculation under this
subclause 2A(2)) as if the additional royalty was assessed under
subclauses 2(11), 2(12) and 2(13), but such additional royalty shall not
be payable in respect of the 1985 royalty year. For the purpose of the 1986
royalty year the relevant comparison shall be between the sum of the two
provisional payments due no later than 23rd September and 23rd December
1986 and 45% of the assessment of royalty payable under subclauses 2(11),
2(12) and 2(13);
(c) the
Minister may, in his discretion, if he is satisfied that the liability to pay
additional royalty under paragraph (b) of this subclause 2A(2) was
not brought about by an attempt on the part of the Lessee to avoid the payment
of royalty, remit additional royalty payable under that subparagraph, or any
part of that additional royalty, and on his so doing the liability to pay the
additional royalty or part of the additional royalty, as the case may be,
shall cease; and
(d) at
the time of making a statement under subclause 2(5) in respect of a
royalty year, the balance of royalty payable for that royalty year as
estimated in the statement.
2A(3) EXTENSION OF
TIME
The Minister may
without prejudice to his rights hereunder grant such extension of time for
payment of royalty or an amount on account of royalty as he considers the
circumstances warrant but in such a case, the royalty shall be due and
payable, or the liability to make the payment on account of royalty shall
accrue, accordingly.
2A(4) UNPAID ROYALTY
(a)
Subject to paragraphs (b) and (c) of this subclause 2A(4) if any
royalty remains unpaid after the time it becomes due and payable, or a payment
on account of royalty remains unpaid after the liability to make the payment
accrues, the Lessee shall be liable to pay an amount of additional royalty
calculated by applying an annual rate of interest equal to the accumulation
rate to the amount of royalty outstanding for the period of time it is
outstanding.
(b)
Where an extension of time for the payment of royalty or on account of royalty
has been granted under subclause 2A(3), the additional royalty payable
under this subclause 2A(4) shall be computed from such date as the
Minister determines, being not earlier than the date on which the royalty
would have been due and payable or the liability to make the payment on
account of royalty accrued, had that extension of time not been granted.
(c) If
any royalty remains unpaid for more than three (3) months after the time it
becomes due and payable or a payment on account of royalty remains unpaid for
more than one (1) month after the liability to make the payment accrues, then
in either case the Lessee shall be deemed to have breached this lease and the
provisions of paragraphs (a) and (b) of Clause 21 of this lease
shall apply.
2A(5) AMOUNTS OVERPAID
(a)
Where, by reason of an assessment or an amendment of an assessment of his
liability to pay royalty, or for any other reason, the Lessee has paid an
amount for royalty in excess of his liability to pay, the
Minister: —
(i)
may, where he is satisfied that the Lessee will have,
within 30 days after the Minister becomes aware of the overpayment, a
liability to pay a further amount of or on account of royalty, retain that
overpayment, or so much of it as he thinks necessary to meet that further
liability, on account of that further liability, which liability shall be
reduced by the amount so retained; and
(ii)
shall, in any other case, refund to the Lessee within
30 days of a claim for repayment being made by the Lessee in writing the
amount of royalty overpaid.
(b)
Where eligible rehabilitation and well abandonment expenditure paid by the
Lessee immediately prior to or after ceasing of active operation of the
production unit has resulted in negative nett value in the royalty year in
which the production unit ceases active operation or in the subsequent three
royalty years the Minister shall refund an amount of royalty equal to 40 per
cent of the nett value in those royalty years, with an upper limit equal to
the total value of previous royalty payments by the Lessee under this
Lease.”
(2) Clause 21
— by inserting after paragraph (g) the following
paragraphs: —
“
(ga) In any case where the State, the Minister or
any other Minister in the Government of the State is by this lease given a
discretionary power including without limitation a power to form an opinion,
make a determination, give consideration, reach a conclusion, make a grant,
give an approval, make a requirement or be satisfied as to any matter, then in
the exercise of such discretionary power the State or Minister shall act
reasonably and shall have due regard to the circumstances enumerated in this
Lease in relation to which the discretion is to be exercised as they exist in
fact independently of the exercise of such discretion or the formation of such
opinion.
(gb)
If the Lessee considers that the State or the
Minister has exercised any discretionary power otherwise than in accordance
with paragraph (ga) of clause 21 it may, except as otherwise
provided in this lease, within 42 days after becoming aware of the
exercise of that discretionary power, give notice in writing to the State or
the Minister stating the reasons why it considers that discretionary power has
not been exercised in accordance with paragraph (ga) of clause 21
and requiring the exercise of that discretionary power to be referred to
arbitration in accordance with paragraph (g) of clause 21. An
arbitrator acting in accordance with paragraph (g) of clause 21
shall, in reviewing the exercise of a discretionary power by the State or the
Minister, be empowered to determine the decision which should have been made
upon the proper exercise of that discretionary power in accordance with
paragraph (ga) of clause 21 and that determination by the arbitrator
shall bind the State and the Minister and the Lessee. This paragraph shall
not, however, limit the other rights and remedies of the parties. ”
(3) by adding after
Clause 21 the following Clause: —
“22. NOTICES
Any notice, consent or
other writing authorised or required by this lease to be given or sent shall
be deemed to have been duly given or sent by the State if signed by the
Minister or by any senior officer of the Public Service of the State acting by
the direction of the Minister and forwarded by prepaid registered post or
handed to the Lessee at its nominated office for the time being in the State
and by the Lessee if signed on its behalf by any person or persons authorised
by the Lessee or by its solicitors as notified to the State from time to time
and forwarded by prepaid post or handed to the Minister and except in the case
of personal service any such notice, consent or writing shall be deemed to
have been duly given or sent on the day on which it would be delivered in the
ordinary course of post. ”.
Variation 3
7. (1) The parties
hereto may from time to time by agreement in writing add to substitute for
cancel or vary all or any of the provisions of this Agreement or of the Barrow
Island Lease for the purpose of more efficiently or satisfactorily
implementing or facilitating any of the objects of this Agreement, including
but without limitation the object of providing for the payment of royalty in a
way that does not render uneconomic eligible capital expenditures to enhance
recovery of petroleum in the Barrow Island Lease.
(2) The Minister shall
cause any agreement made pursuant to subclause (1) of this Clause 7,
in respect of any addition substitution cancellation or variation of the
provisions of this Agreement to be laid on the Table of each House of
Parliament within 12 sitting days next following its execution.
(3) Either House may,
within 12 sitting days of that House after the agreement has been laid before
it pass a resolution disallowing the agreement, but if after the last day on
which the agreement might have been disallowed neither House has passed such a
resolution the agreement shall have effect from and after that last day.
Facilitation 3
8. The Minister or the Premier for the time being
of the State may from time to time make, execute and do or cause to be made
executed or done all necessary incidental instruments and acts which may be
necessary or convenient to protect, secure or otherwise ensure compliance by
the Lessee with the terms of the Barrow Island Lease.
Commonwealth State arrangements 3
9. The State and the Lessee acknowledge and record
that this Agreement has been entered into in pursuance of an agreement,
arrangement or understanding between the State and the Commonwealth and that
the State and the Commonwealth have entered or will enter into an agreement
under which the State will pay a proportion of the royalty payable under the
Barrow Island Lease to the Commonwealth and the Commonwealth will exempt
petroleum commodities produced from petroleum from the Barrow Island Lease
from duties of excise with effect from 1st July 1985.
Modification 3
10. Save as modified and varied by this Agreement,
the Barrow Island Lease shall continue in full force and effect.
Applicable Law 3
11. This Agreement shall be interpreted according
to the law for the time being in force in the State of Western Australia.
IN WITNESS WHEREOF this Agreement has been executed by or on behalf of the
parties hereto the day and year first hereinbefore mentioned.
|
SIGNED by the said THE HONOURABLE BRIAN THOMAS BURKE, M.L.A. in the presence
of: — |
) |
|
DAVID PARKER
MINISTER FOR MINERALS AND ENERGY
|
THE COMMON SEAL of WEST AUSTRALIAN PETROLEUM PTY. LIMITED was hereunto affixed
by authority of the Directors in the presence of: — |
) |
|
D.E. HURST H.P. WILLIAMS
MANAGING DIRECTOR
ASSISTANT SECRETARY