4.1
This chapter considers mechanisms aimed at improving benefit through oil and gas transparency and accountability, in particular, through information and data transparency.
Improving data transparency
Data to stimulate exploration and development
4.2
Australia's strategic approach is outlined in the National Resources Statement and Action Plan and commits the government to '[opening] up new industries and resources regions', with a focus on exploration and basin development.
4.3
The emphasis on exploration and development continues a long history of oil and gas exploitation in Australia. In a 2015 review into the Offshore Petroleum Resources Management Framework, the Department of Industry, Innovation and Science (DIIS) highlighted the need to stimulate exploration and to improve the timeliness and efficiency of development and production.
De-risking exploration
4.4
Since at least 1970, the Australian Government has provided a range of data to industry, free of charge or at very low cost to reduce risk and encourage exploration and investment in the Australian resources sector. This approach is supported by the Productivity Commission (PC), which characterises the information provision as a public good that helps attract private investment to Australia. Pre-competitive geophysical data is provided in other jurisdictions including the United Kingdom (UK), Canada and New Zealand.
4.5
Since the 1990s there have been multiple attempts to improve resource data at a national level. In 2018 the Resources 2030 Taskforce recommended a holistic, long-term Resources Data Strategy focussed on improving the scope and management of geoscience data and a national environmental and heritage repository to enable improved decision making, transparency and data access. This recommendation was accepted by states and territories and work to support a Resources Data Strategy commenced in 2019. A scoping study was completed in 2020.
4.6
Geoscience Australia (GA) told the committee of the success of this model for the oil and gas industry:
… one of the key comments we keep getting about why we have a competitive advantage in Australia is that it is because we make this data freely available, so it keeps us competitive in a global sense.
So the global resources industry look to us and think Australia [i]s a fantastic model because we can get access to this freely available data to make investment decisions that are global.
I don't think we would get that investment as much if we didn't make it available, because we've seen overseas that, where countries decide to charge for the data, there's a drop off in the exploration.
4.7
GA added that the data they provide de-risks oil and gas exploration and benefits the wider economy:
Through that science base and evidence base we de-risk and we provide a basis of surety to allow investment to occur, with the hope that, when they do their exploration and they identify a resource, they identify a resource that is economically viable, goes through into development and then adds those benefits to the economy.
4.8
These data sets are acquired either through specific government-funded initiatives, or by making use of the large volumes of open data that have been submitted by industry and held by GA, with costs for geological surveys shared with other jurisdictions.
4.9
GA noted in their evidence that the information-gathering powers of GA itself are limited but that there is the potential for this role to be expanded:
… notwithstanding the value to government, industry and the public of national resources inventories that Geoscience Australia complies, while it may be viewed that Geoscience Australia is possibly the only government agency that is positioned to produce a national inventory, it is important to highlight that we currently actually have no authority to compel companies or regulators to report this data on which these aggregated national estimates are based.
4.10
Witnesses noted a number of areas where improvements could be made. The PC's review of resources sector regulation observed that there was room to improve data transparency, including in relation to exploration data, but on occasion data should not be released:
Resources projects [including oil and gas] generate rich data and information about geological formations and the quality of resources, heritage sites, threatened species, groundwater assets and more. While much is collected, relatively little is made publicly available. In some cases, there are good arguments to limit access. For example, incentives to explore would be weakened by requirements to release private geoscience data early in the life of projects and the location and nature of Indigenous heritage sites are often highly sensitive. But more generally, the release of collected data would reduce duplicated effort and unnecessary costs for proponents, and promote outcomes monitoring. Digital technologies would support the relatively low cost collection and management of data and information.
4.11
Professor Clinton Fernandes submitted that the public funding of geological surveys and petroleum resource studies meant that 'the Australian public bears the costs and risks of investment while the benefits accrue disproportionately to small groups in control of vast concentrations of wealth and influence'.
4.12
However, GA emphasised that the data they provide is a public resource, available to be utilised by both major and minor operators who 'may have more niche capability to develop and identify new resources'. GA highlighted the benefits of its pre-competitive data in supporting investment in Australia's oil and gas industry, with flow on effects to revenue, employment, business and infrastructure. Moreover, it highlighted the importance of its offshore pre-competitive program to environmental and marine management, as well resource management and carbon capture, utilisation, and storage (CSSU).
4.13
GA told the committee that a 2019 study by ACIL Allen examined the benefits of GA data and its likely return on investment to the Australian Government—with returns for selected projects estimated at between $92 million and $632 million—well in excess of the cost of the programs. The report also found that the estimated benefit of taxpayer funded programs to private companies was in the range of $446 million to $2.5 billion.
Review of pre-competitive data
4.14
A 2015 review highlighted the value of GA's precompetitive information and suggested it be broadened to better match industry requirements. During the review, stakeholders suggested the work could be better aligned with acreage release and industry exploration strategies and that the base of the work could be expanded to provide greater attention to frontier areas more quickly. It was suggested GA and industry should collaborate on geoscientific activities including on regional geological studies, provenance studies, tectonic framework studies, and geochemical studies.
4.15
The review identified three emerging issues:
the opportunities for new exploration technologies to explore for sub-sea floor resources;
increasing costs and a move to deeper water exploration—affecting the risk appetites and work programs of oil and gas companies; and
a changed focus to finding in-fill resources for existing projects, and the search for new major resources in frontier areas, leading to a decline in overall offshore exploration effort.
4.16
Several long-term trends were observed including: fewer wells being drilled, higher success rates, smaller hydrocarbon finds, and greater attention on mature areas to reduce risk and costs.
4.17
The review found that the government had to ensure that the regulatory and policy regime reflects the 'realities of offshore exploration in the 21st century'—primarily the need to attract new exploration to maintain a healthy project pipeline. The government undertook to de-risk exploration through better geoscience information, provide greater operational flexibility in lightly explored areas, and streamline the acreage release process. Further, industry and GA were encouraged to engage on GA's forward data and interpretation programs, to further identify and support complementary activities.
4.18
The subsequent Exploring for the Future program is designed to examine resource availability in 'frontier regions' where companies typically do not undertake exploration due to high risks. In 2016 the government invested $100.5 million in the project over four years. In June 2020 the government expanded the program for another four years with a further $125 million in funding—bringing the total investment to $225 million.
4.19
In March 2021 eight new projects were announced, including two projects directly relevant to oil and gas exploitation:
Australia's Future Energy Resources—with an initial focus on central Australian basins, this project will investigate and map prospective conventional and unconventional hydrocarbon resources, including evaluating enhanced oil recovery technology to produce residual oil zones with associated capture and storage of CO₂; and
Australia's Resources Framework—a continental-scale project to improve the knowledge of Australia's subsurface geology.
4.20
The information collected through the Exploring for the Future program will be made publicly available free of charge with the intention of 'de-risking' the activity. Data from the petroleum wells application is currently being transitioned to the Exploring for the Future portal.
Well, samples, seismic and survey data
4.21
The National Offshore Petroleum Titles Administrator (NOPTA) collects exploration data—including wells, sample, seismic and survey data—submitted by companies under a memorandum of understanding.
4.22
GA is contracted to assist NOPTA with the compliance assessment of this data and securely stores data and samples on behalf of NOPTA while they are in the confidential period. Once this period expires the data is released publicly by GA and integrated into its pre-competitive data holdings.
4.23
During 2020–21 NOPTA conducted a benchmarking survey of data submitted since 2016. It considered the timeliness and completeness of submissions as well as the usability of the data (consistency and format) and company responsiveness (level of compliance activity to resolve any arising issues).
4.24
Overall, it found that the data had improved since 2016, but that quality had dropped since its peak during 2018–19. Consequently this is an area of ongoing focus for NOPTA.
4.25
But Australia may not be utilising its data successfully. Some estimates show that operators are currently using less than one per cent of data being collected at the well. Achieving exploration efficiencies is possible through the improvement data including through autonomous collection (for example of seismic data), especially in frontier basins, more detailed pre-competitive datasets which can be analysed through artificial intelligence or even crowd sourcing, to better locate and understand resources prior to drilling, improving drilling accuracy, identifying low water options and reducing the exploration footprint.
ACIL Allen Review
4.26
As part of the department's review of the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011 (RMA Regulations), ACIL Allen was contracted to review data policies and regulations, reporting in December 2020. One of the key recommendations was that the Department of Industry, Science, Energy and Resources (DISER) use the findings of their report to develop a framework that would (amongst other things) 'make data made publicly available as early as possible, aligned with the Australian Government's open data policy, while maintaining an appropriate balance between commercial and public interests'. The review highlighted the importance of provision of information and that market failure does not occur through asymmetric provision of information and inequity or unfairness, negatively impacting on the maximisation of benefit from Australia's oil and gas reserves.
4.27
ACIL Allen observed, in relation to the regulations, that the objectives of the highly prescriptive and complex information management elements are not clear:
… some information has been made permanently confidential and release of other information has been delayed for various periods ranging up to 15 years. These limitations on release of information suggest that those who made the regulations perceived the existence of positive and negative effects on petroleum and greenhouse gas storage activity of mandated release of privately generated information, and considered that a trade-off was required between mandated release of privately generated information and leaving generation and dissemination of information to market forces.
4.28
Significantly, the review found that the reasons for current accessibility settings are unclear and at odds with the government's open data policy:
A sound economic [or ethical] justification could not be found for retention of the practices supporting permanent confidentiality of some forms of exploration/assessment information and delays to public release of other information beyond the elapse of sufficient time for explorers to analyse and interpret data, and write up the results … the cost [of delaying release of information] is the resource misallocation associated with external costs of asymmetric information and reduction of benefits to the community from the public good nature of exploration information.
4.29
The review found that this information would be valuable to other explorers, reducing exploration risk and improving competition in future title bidding rounds would result in 'high expected revenue to government from cash bidding'. The review also found that there are various policy measures which can be used to address information-related market failures and that they intersect in different ways to support or undermine wider oil and gas policy.
4.30
The report recommended the prompt release of private sector petroleum and greenhouse gas storage information (with some minor exceptions), with government support for early-stage exploration in frontier areas, and cash bidding for relatively unconditional titles in order to help prevent the misallocation of resources, prevent market and policy failures, decrease information asymmetries and generally to 'improve the performance of information policy in terms of effectiveness, economic efficiency and equity'.
4.31
Stakeholders supported less prescriptive, more objective-based regulations, and some emphasised the need for requirements to be clearly defined and for a greater emphasis on quality assurance by regulators. Stakeholders also advocated for the addition or change of aspects relating to data ownership after submission, intellectual property, definitions relating to confidential data, improved data standards and compliance monitoring and better consistency between petroleum and greenhouse gas (GHG) data release provisions.
4.32
In relation to basic and interpretive information, the review found that economic rationale for the differing retention periods could not be found and that there was broad consensus for retaining confidentiality for just two to three years to create an appropriate balance between the interests of those who acquired the data and the broader public interest.
Performance data
4.33
Increasingly, companies are expected to be able to reliably report and predict their performance data, including failures and breakdowns. This could enable them to anticipate maintenance and repairs—reducing costly downtime. Improved information flows through the entire supply chain are also expected to optimise business and better match supply with demand.
4.34
A number of submissions pointed to the importance of improving the availability of public reporting of oil and gas data and access to joint venture meetings, given it is a public resource. According to one submitter, the Callaghan Review had to purchase data from an industry consultant because the government did not have the data necessary to evaluate the petroleum resource rent tax (PRRT).
4.35
As noted by the Organization for Economic Cooperation and Development (OECD), open data is one of the primary ways that countries can counteract corruption in the extractives sector, ensuring accurate transfer pricing risk assessment, assisting enforcement, monitoring compliance, and enabling public scrutiny and ensuring that the recovery of oil and gas is optimised.
Production data
4.36
In Australia, the RMA Regulations describe the treatment of different types of data, with the aim of protecting confidential data, while enabling the management and exploitation of oil and gas resources.
4.37
In other jurisdictions such as South Australia and Queensland, this data is freely available with production reports available six months after reporting. Mr Robert Cook noted that Australia's offshore confidentiality restrictions make it impossible 'for third parties … to know how efficiently operators have exploited Australia's oil resources' and to verify efficiency claims by operators.
4.38
This view concurs with the findings of the PC's review of resources sector regulation, which found that data should be more transparent. It cited NSW regulations as leading practice:
There is no case for a major reform of the Australian pre competitive geoscience arrangements given the quality of the information is highly regarded. However, the coverage of geoscience databases could be further improved, for instance, by all jurisdictions adopting sunset confidentiality periods for public release of private exploration and production reports prior to the end of the tenure of a project. The public benefits of open access to exploration information must be balanced against the private incentives to explore.
4.39
In the UK monthly field production data is disclosed after two months, with detailed daily well production data available after the cessation of production. In 2020 the UK published daily production figures from wells which had ceased production, some with production figures dating back over 40 years. The media release conveyed the importance of this data, with engineers and academics expected to use the data to identify CCUS sites and areas which may still be productive—scrutiny critical to maximising economic recovery and lowering emissions.
4.40
DISER currently publishes monthly estimates of petroleum production, taking the data from a range of sources including consultant reports with trade data and Australian Bureau of Statistics (ABS) data. Companies are encouraged to report gas production voluntarily. This is similar to the United States (US) Energy Information Administration, which provides jurisdiction level production estimates on a monthly basis.
4.41
Monthly natural gas production in the east coast market is published by the Australian Energy Market Operator (AEMO), including data sourced from NOPTA and Western Australia (WA).
4.42
GA does not currently have role in receiving resource and production data during the production phase. However, it does receive and publish de-identified and aggregated offshore data from NOPTA at the basin level. NOPTA routinely receives production data from oil and gas companies and also makes decisions about the confidentiality and release of the data, under its legislative framework. Similarly, GA holds other information in custody for the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) and sources other published data.
4.43
In response to questions on notice DISER advised the committee that monthly production reports are not considered to be 'excluded information' under the RMA Regulations, however they may be kept permanently confidential where NOPTA considers it appropriate. This includes where NOPTA considers the information to be a trade secret or where the disclosure would or could be reasonably expected to adversely affect the entity's business, commercial or financial affairs.
4.44
Senator Rex Patrick went to some lengths to determine why production data, which is freely available in other jurisdictions, is deemed confidential for Australian offshore projects. He was given a variety of responses:
Some of that data in its substance is confidential as a consequence of legislation.
when we took over the regime—that is, the establishment of NOPTA—on 1 January 2012, the resource management regulations were already in place within a framework. I work within the regime that has been provided. That, at that time, called for production reports to be kept permanently confidential, and I have kept that in accordance with policy and all the rest of it.
I am sorry that I am unable to enlighten you as to the genesis of why that occurred. It predates my appointment and may well have its genesis way back under a previous regime. I regret that I can't enlighten you any further.
… it is to do with competitive advantage for the companies. We operate on the principle that we are like any other company that might get access to information, so there is no preferential treatment provided. We only get access to information when it becomes public. Otherwise it remains the property of NOPTA.
The established operators prefer their operations to remain confidential because of the competitive edge it provides but it does nothing to encourage a healthy Australian oil and gas industry or ensure recovery of Australia's oil and gas reserves are optimized for the benefit of Australians.
… one should definitely report to regulators as required under the legislation that governs the activity under which you undertake it. Transparency is something that would be set down by the government of the day in terms of what would be required.
It's probably the way it was set up. Big oil probably liked to have it that way. It's better for them.
4.45
Senator Patrick contended that information about a public resource should be public, telling the Senate that:
It makes no sense to me that this data would be made confidential. You have to remember that this information is about our resources, about the Australian taxpayers' resources. Companies claim that it's commercially confidential, but—you know what?—when companies come along and say, 'I want to extract your oil and gas resources,' there's a price to that, and one of those prices is transparency. It's not commercial information.
4.46
Its review report, ACIL Allen observed that the terms 'trade secret' and information which if made available would adversely affect a company's affairs have not been defined, and that the regulations provide no further guidance as to factors which should be considered when deciding whether information is deemed permanently confidential.
4.47
However, ACIL Allen found that Australia's rationale for keeping this data confidential was flaky:
Explanations of long lags in releasing non-exclusive information are more common, but typically terse, vague and unconvincing.
Time lags chosen by governments often appear to have been based on what other jurisdictions have done, rather than on any analysis of the economics of exploration and assessment, and the economic characteristics of information. Consequently, there has been domestic and international convergence on information release rules that lack any solid analytical foundation.
4.48
The review also found that, in relation to the release of production reports there was considerable variability across Australian jurisdictions. The report concluded that publication of the bulk of the information in the reports is in the public interest, with certain financial and commercial information redacted. One of the stakeholders stated:
Production data can be useful in exploration, appraisal, and development, for example, to validate recovery factors used in prospect assessments. There would be some benefit to production data being released in a timely and consistent manner.
4.49
Furthermore, the review found that production reports would also provide the regulator with sufficient data to ensure that rehabilitation and remediation liabilities 'are understood and managed appropriately to minimise the public's exposure to risks and costs'. State governments also strongly supportive of the early release of production data, arguing that the community has a right to know how its resource is being used.
4.50
ACIL Allen found that a more open approach to a wider range of information, would be beneficial:
There do not appear to be any sound economic or ethical reasons for the Government to support permanent confidentiality of most of the information in the last four of the six categories of currently excluded information (except to the extent it pertains to the technical qualifications and financial resources of applicants for, and holders of titles)[relating to re-evaluation of commercial viability of production n a lease area, reports on discoveries, title assessment reports and field development plans]. Indeed, it is not apparent why this information should not be released promptly. The information in these categories would be valuable to other explorers and would facilitate better informed activities.
4.51
In May 2021 the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Bill 2021 was introduced into Parliament to address ongoing and trailing liabilities, specific decision-making criteria and expanded information-gathering powers. However, data transparency measures proposed by Senator Patrick were not supported by the Coalition or Labor, with the government advising that:
… as part of the review process for the regulations, we will continue to work in relation to providing that data, but these changes need to be undertaken through a proper consultative process … if you are going to deliver changes that are going to deliver real improvements in data transparency, they be undertaken through a robust process so we do not have unintended consequences as a result of putting through something that has not been drafted to the level that would satisfy both the government and, clearly, the opposition. We also need to bring the industry along to make sure we understand the implications for them as well.
4.52
Senator Murray Watt advised the chamber that Labor was not prepared to support recently proposed amendments to the release of data given that they 'could have unintended consequences for the safety of these projects and the environment'.
4.53
Both Chevron and Mr Cook advised the committee that they had no concerns about safety in relation to the release of production data, with Mr Cook noting that keeping the information confidential may in fact increase safety risk:
There's absolutely no reason why it shouldn't [be released]. Keeping the information confidential or restricted almost causes safety risk, I think. It doesn't enhance safety.
4.54
INPEX had no objections to the release of the monthly production reports and Mr Cook supported their release:
There's absolutely no reason for it to be confidential. Once you've been granted a production licence you have the rights to produce the oil and you have all the protection you need. That's provided by the license; you don't need it to be confidential.
…
Why shouldn't we know how much oil we have left in the ground or how it's being produced? It's a nonsense. Elsewhere in the world you can get it, so why can't we get it here?
4.55
The Australian Manufacturing Workers' Union (AMWU) also supported making data available as widely as possible:
…[it] believes that the public have a right to information that relates to projects that are being undertaken by the government. Too often commercial-in-confidence arguments are used to cover up underperformance or incompetence and hide information that is embarrassing to the government.
Further, given the important oversight role played by the Senate, the AMWU believe that there should be virtually no limit on the information that should be provided to it upon request. Anything less is a contempt of this important institution.
4.56
The Australian Petroleum Production and Exploration Association (APPEA) told the committee that data confidentiality and release was a matter for the government, as the owner of the oil and gas reserves.
4.57
The most recent Review of activities of the National Offshore Petroleum Titles Administrator found that while NOPTA holds valuable data it is unable or 'perceived to be unwilling to share this data'. The review found that:
Current settings are too conservative, and not pragmatic or supportive of a cohesive application of policy or regulation. There is a risk of disconnect of regulatory and policy application, missed policy improvement benefits, and inefficiencies with the current siloed approach. Exchange of data and information is the foundation of any successful partnership. We recommend that the Government identify and address these barriers, applying an outcome-based approach in determining the scope of data to be exchanged, whilst still protecting mandatory privacy and commercial sensitivity requirements.
4.58
The review also considered that data gathered through titles administration activities should be used more fully to inform policy development.
Efficiency and operation data
4.59
At present NOPTA collects and reports on recovery efficiency anonymously by project or field and NOPTA 'seeks to maximise the level of petroleum recovery from each project', including through production monitoring, annual performance review meetings and assessments of particular projects to see how they are optimising recovery from an engineering, geological perspective.These reports are confidential.
4.60
NOPTA has recently reviewed 57 major offshore gas fields and found a recovery factor of between 15 and 90 per cent, with lower recovery fields characterised by higher complexity, as illustrated by Figure 4.1. Data, obtained from titleholders, is held in the recently commissioned Field Benchmarking Database, with key datasets including:
… field and reservoir properties, facilities data, development timelines and development costs. The Database also references reserves information, production data and estimated ultimate recovery, thereby allowing for quantified analysis and assessment of offshore gas fields in Commonwealth waters within a variety of subsurface, development, operational and commercial contexts.
… The derived insights are practically useful and valuable for both titleholders and NOPTA, with the shared objective of delivering continuous improvement in optimum long-term recovery and good oilfield practice.
4.61
However, NOPTA does not appear to require the collection and publication of well production efficiency data, including reservoir pressure, which can drive efficiency improvements by operators through benchmarking and often corresponds to lower emissions, for example by reducing leakages, flaring, reductions in gas used for production such as liquefaction. The UK, which publishes detailed production efficiency data has seen a 23 per cent improvement in efficiency since 2014 and a corresponding 10 per cent decrease in carbon emissions, per barrel of oil produced.
4.62
This process of measurement and improving efficiency has yielded benefits for operators also with the Oil and Gas Authority (UK) (OGA) reporting that:
Evidence shows a reversal in the declining production potential trend coupled with a sustained decrease in production loss volumes in the UKCS [United Kingdom continental shelf]. This has yielded an increase in realised production in 2015, the highest since 2011 and a clear indicator of improved performance.
4.63
The OGA has reduced the amount of data that it collects but also made it more useful, enabling its stewardship reviews more targeted and less burdensome, and more acceptable to operators.
4.64
GA advised the committee that it doesn't make any assessment as to whether resource recovering is maximised, beyond looking geologically at the prospective reserves versus what is actually produced.
4.65
There is also scope for operators to better use their data to improve performance—some estimates show that operators are currently using less than one per cent of the data being collected at the well. Achieving exploration efficiencies is possible including through autonomous collection (for example of seismic data), especially in frontier basins, and more detailed pre-competitive datasets, which can be analysed through artificial intelligence or even crowd sourcing, to better locate and understand resources prior to drilling, leading to better outcomes.
4.66
The ACIL Allen review report noted that late-life or title-relinquishment data is not explicitly required by the current RMA Regulations. While stakeholders generally supported the collection and release of more data into the public domain, acknowledging that late field life data may become increasingly important for the evaluation of potential GHG storage sites and opportunities for enhanced oil recovery, they observed some issues.
Onshore oil and gas data
4.67
While discussing data confidence in relation to oil and gas reserves, Dr Barry Bradshaw advised the committee that GA is confident in its data about existing and contingent reserves, it is uncertain in relation to frontier areas such as the Great Australian Bight and Bremer basin, as well as the extent and quality of onshore unconventional reserves. Dr Bradshaw advised that in this case GA needs well data in order to understand the geology, pressure, and potential size of the reserves.
4.68
GA advised that committee that it does not receive onshore field-level data from oil and gas companies, with this done at state or territory jurisdiction level.
Safety data
4.69
The most recent Review of activities of the National Offshore Petroleum Safety and Environmental Management Authority recommended that the RMA Regulations explore mechanisms to gather more data from titleholders, including that relating to:
… safety, well integrity, and environment related matters outside of current incident or accident reporting parameters to inform trends and predictive analytics.
4.70
Currently, the data that NOPSEMA receives is limited, with the majority of data and metrics relating to lag indicators on safety performance. The review found that there would be benefits in gathering additional data to improve regulation and inform trends and predictive analysis, particularly as the industry matures and becomes more complex.
Maximising return through improved data transparency
4.71
A number of submitters recommended that oil and gas data confidentiality requirements be removed, and that the data be made freely available, preferably through a publicly available database, as is available in other jurisdictions.
4.72
Mr Kevin Morrison pointed to the challenges of compiling and analysing data from multiple agencies and sources, including across jurisdictions, in order to understand production, revenue and payments to government over time, but highlighted its benefits:
… we'd have a much more informed debate about energy if there was a better presentation of data. The energy data of production and consumption is spread across multiple agencies … If this was all gathered, like they do in the US, under their Energy Information Administration—if Australia had the equivalent—it would help inform both policymakers and the general public.
4.73
Mr Boyd Milligan and Professor Peter Newman told the committee that it is difficult to hold the oil and gas industry to account without this data transparency:
… it is impossible to be entirely accurate in investigating this industry as data on quantities and qualities of the feed gas, which incidentally belongs to the people of WA, and related emissions, which impact on the Australian people and their commitments, is kept confidential by most project proponents. We conclude that this secrecy increases in parallel with the growing awareness within the general community of the impact of GHG's will have on our lived environment. The industry thus appears to act as if there is something to hide.
4.74
Mr Cook advised the committee that transparency would have the added benefit of enabling parties other than the operator and NOPTA to review field plans and operations, enabling, for example, tertiary recovery potential to be assessed and extraction maximised.
4.75
Professor John Chandler submitted that changes to reporting and benchmarking could be used as an incentive and a means to drive performance improvements:
As noted above, the OGA [Oil and Gas Authority (UK)] is taking benchmarking company performance to a new level. It publishes anonymised league tables for things like recovery, efficiency and operating cost which they then follow-up in stewardship reviews. This is both an extremely strong incentive for companies to improve performance, but also a means for them to improve ...
Oil and gas financial reporting
4.76
Financial data, such as operator revenue, is hard to compile as internationals do not break down their Australian liquefied natural gas (LNG) revenue nor disclose profits from their LNG business.
4.77
Mr Mark Ogge from the Australia Institute explained the current issues and the importance of transparency to Australia's long-term interests:
… there's a huge lack of transparency. There's so much that we just can't look at in terms of why they're paying such low PRRT, the production numbers from various projects and all that kind of thing. It's our resource; the Australian people's resource. There should be pans [sic] and transparency around that. We should be able to see how much they're producing, how much they're selling and how much tax they are paying on it.
4.78
Strategic Sustainability Consultants and Global Goals Australia told the committee that financial transparency is essential to sustainable operations:
… when considering economic, social and environmental sustainability of operations of oil and gas companies in Australia, Goal 16 must be addressed. Most notably, it is necessary to ensure transparency of organisations in the space, including industry bodies and trade unions. There must be an emphasis on the integration of anti-corruption systems, free from bribery and other such deals.
4.79
Professor Chandler advocated for improvements to address gaps in Australia's assurance model, including reviewing the economic viability of projects, for example through the field development plan approval.
4.80
Both Publish What You Pay and the Centre for International Corporate Tax Accountability and Research (CICTAR) advocated strongly for Australia to improve governance and strong data transparency in relation to oil and gas financial data, in particular through the adoption of the Extractive Industries Transparency Initiative (EITI) Standard for extractive resources.
4.81
The standard promotes data transparency, inform its citizens and to reduce opportunities for corruption. Both submitters also advocated for mandatory disclosures of payments to government—such as those measures already in place in Canada and the European Union—and told the committee that transparency is an important basis to maximising public benefit and enabling the public to see whether they are benefiting:
These two important measures [adoption of the EITI Standard and mandatory disclosures] are emerging global standards for transparency that Australia is failing to meet. Increased transparency increases the accountability of both corporations and governments to make sure resource exploitation provides public benefits in addition to corporate profits. At the moment, oil and gas companies operating in Australia are generating huge profits from Commonwealth resources with little public benefit.
4.82
Mr Clancy Moore of Publish What You Pay explained to the committee that Australia's inadequate levels of data transparency encourage corruption and aid some companies in avoiding their taxation responsibilities, while at the same time receiving public monies:
Australia should be a leader in good governance and addressing corruption risks in the oil and gas sectors. However, our standards of transparency lag way behind other OECD nations, including those with large oil and gas reserves, like Canada and the UK, and even our neighbours, Timor-Leste and Papua New Guinea. To date, the government has chosen not to implement the Extractive Industries Transparency Initiative. This initiative is known as the gold standard for anticorruption and revenue transparency.
4.83
Mr Moore also told the committee that the Australian government has invested almost $26 million in supporting other countries to implement the EITI, but has not committed to implementing the standard itself.
4.84
DISER advised the committee that member countries report publicly on an annual basis:
The EITI Standard requires information along the extractive industry value chain from the point of extraction, to how the revenue makes its way through the government and its contribution to the economy. This includes how licenses and contracts are allocated and registered, who the beneficial owners of those operations are, what the fiscal and legal arrangements are, how much is produced, how much is paid, where the revenue is allocated, and its contributions to the economy, including employment.
4.85
Furthermore, data would be reported at a project level and include both company and government data:
… [it] would mean that participating companies would report on how much tax and royalties and other sector-specific payments they make to governments. Also, governments, both state and federal, would report on how much revenue they receive from companies. Importantly, the level of reporting that would be required also looks at project-level data. This is really, really important, because it's often at the project level where corruption and tax noncompliance takes place. The EITI, as it's known, also includes reporting on contracts and, importantly, who holds exploration licences, and who are the ultimate beneficiaries of private oil and gas companies—who stands to benefit from gas projects.
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DISER also told the committee that in 2016 the government agreed to implement the EITI, after an earlier successful pilot program and with strong industry support. A Multi Stakeholder Group (MSG) was established, and Australia was to have submitted a candidacy application in 2017. In September 2019 the government released an EITI gap analysis document prepared by KPMG, however this report has not been considered by the MSG, nor responded to by the government. The MSG has not met since March 2019.
Disclosure of climate-related risks
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Institutional investors and activist shareholders are requiring greater transparency and disclosures from oil and gas companies in relation to asset and investment write-downs (including those resulting from climate-related factors), with greater risks for directors and officers. The Business Council (BCA) of Australia warned that bank and asset managers are demanding disclosure of investments in fossil fuels and that:
In meetings with shareholders, BCA members report that environmental, social and governance (ESG) and specifically decarbonisation plans are no longer a separate or side issue, but have become core to investors' portfolio allocation decisions.
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Australian investment losses in the oil and gas sector amounted to more than $18 billion during the first half of 2020, excluding losses recorded by privately held companies which do not have the same public disclosure obligations.
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This is supported by observations of the market:
…as stranded asset risks in fossil fuels continue to rise, and fossil fuel share prices continue to decline, financial institutions are refining their ESG policy frameworks and increasingly taking a commercial line aimed at avoiding losing even more capital—be it debt, equity or via insurance losses.
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The committee heard from Mr Piers Verstegen, Director of the Conservation Council of WA, who advised that climate costs and risks and the benefits flowing from the oil and gas industry (discussed further in Chapter 6), had not been made sufficiently transparent and that more could be done:
I think there's been a failure of transparency in relation to the costs that have been passed on to Australian taxpayers and the rest of the community from this industry and a lack of transparency about the actual benefits that are flowing. From what we know, the benefits are very small, and the costs are very large. Yes, I think any way you look at it this [oil and gas] industry hasn't been good for Australia. But, going forward, the costs are increasing and the returns are decreasing. Many of the costs are deferred. They're deferred to future generations. They're deferred in relation to liability for remediation. Those costs will be borne in the future by taxpayers and by future generations. So, to the extent that those costs are very, very significant, we need to be seriously looking at them now and getting a plan in place to scale down and wind back this industry, as is required to take action on climate change.
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Strategic Sustainability Consultants and Global Goals Australia also called for improved climate transparency and assurance that companies are operating in accordance with the 17 global goals for sustainable development, including across operations and procurement activities. It submitted that:
The Global Goals should be adopted by corporates in the oil and gas industry and reported on accordingly. It is the belief of the Global Goals Australia Campaign that the Australian Securities Exchange (ASX) include the Global Goals in their next revision of their Corporate Governance Principles and Recommendations. We also strongly encourage the Australian Government to work with the Australian Securities and Investments Commission (ASIC) to require all ASX-listed companies to report against the Global Goals in-line with the nation's commitment to the goals.
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Recognising the climate risks to the oil and gas industry (as discussed in Chapter 6) the Australian Prudential Regulation Authority (APRA) supports the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) which has developed a disclosure framework as a first step to addressing the data gap on climate risk. In Australia almost 60 per cent of ASX100 businesses disclose climate risks, with some jurisdictions (such as the UK and New Zealand) moving to make these disclosures mandatory.
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APRA is currently developing its first non-binding cross-industry prudential practice guide on the management of climate-related financial risks. It will draw on aspects of the TCFD and other international initiatives and is expected to be finalised before the end of 2021. It has also commenced a series of Climate Vulnerability Assessments (CVAs) of Australia's major banks, with CVAs eventually being rolled out across the banking, insurance and superannuation sectors to improve the robustness of the financial sector.
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ASIC has warned of climate risks to corporate governance, disclosure and breaches of duty of care and diligence for some time, stating that 'ASIC considers that the law requires an operating and financial review to include a discussion of climate risk when it is a material risk that could affect the company's achievement of its financial performance.'
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In 2019 it released updated guidance on climate change related disclosure to ensure directors are demonstrating they have met their legal obligations in considering, managing and disclosing all material risks that may affect their companies, including the risks arising from climate change.
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In support of these concerns, a recent study of over 100 climate-exposed companies by Carbon Tracker and the Climate Accounting Project found that 72 per cent of the 'world's largest corporate industrial greenhouse gas emitters' do not consider material climate issues in their financial statements and audit reports as required by accounting and auditing standards and expected by investors. Thirty-three per cent of the respondents were oil and gas companies. The authors stated:
The implications of these findings are profound. The apparent lack of consideration of material, climate-related matters in the financials raises the prospect that those accounts, like the shadows on Plato's cave, are failing to reflect the true material, climate-related risks.
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A number of companies operating in Australia were found to 'be exposed to climate concerns' including Exxon Mobil and Chevron who were deemed 'significantly exposed' and Rio Tinto which was deemed to have 'some concerns.
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The report called for companies to improve their governance and transparency, for regulators to review financial statements and audits, and consistency between corporate narrative reporting and financial statements and where necessary take enforcement actions, and for investors to communicate their expectations to companies and drive change through their ongoing engagement, voting and investment decisions.
Gas market information
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Some commentators have noted that improved transparency in gas market data will help to deliver fairer and more efficient outcomes, with opportunities for more regular reporting and reporting of de-identified index of contract prices.
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Some improvements have been made with the Australian Energy Regulator (AER) to take over the Australian Competition and Consumer Commission's (ACCC) role in publishing contract price data from 2025, reforms to the ACCC netback prices methodology and the implementation of a new Wallumbilla trading hub:
In previous reports, we have also recommended that all producers in the east coast and Northern Territory be required to publish information on their reserves and resources using a standardised reporting framework on the Natural Gas Services Bulletin Board. We understand that changes to the legislative framework to give effect to this transparency measure are currently being considered by state, territory and Commonwealth Energy Ministers and, if agreed to, should be in place by 2022.
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However, a number of submitters told the committee that gas market transparency needs to be improved to drive better outcomes for consumers. For example, the Australian Workers' Union (AWU) highlighted current lack of transparency issues, Chemistry Australia advocated for ongoing reforms to improve transparency and Lock the Gate Alliance recommended that Australia regulate the domestic gas market with similar standards and rules to those used in the US, inclusive of 'disclosure rules that mandate reporting of average sales prices for oil and gas produced and average production costs for each operating gas field'.