On-shore Conventional Gas Moratorium Lifted

Articles Written by Martin Kudnig (Partner), Rick Ruffolo (Associate)

The Victorian Government recently passed the Petroleum Legislation Amendment Bill 2020 (Vic) (Petroleum Bill) which, by amending the Petroleum Act 1998 (Vic) (Petroleum Act), will overturn the moratorium imposed in 2017 on ‘carrying out (on-shore) petroleum exploration and petroleum production’.

The lift of the moratorium will take effect on 1 July 2021, with on-shore conventional gas development expected to commence in 2023/2024. This change comes after a three year investigation by the Victorian Gas Program which found that there could be up to 830 petajoules of gas in Gippsland and the Otway Basin. 

The Petroleum Bill also invites submissions from the Victorian community relating to ‘the making of decisions’ under the Petroleum Act, including the approval of production licences, exploration permits and retention leases. We can also expect to see significant amendments to the Petroleum Industry Regulations 2011 (Vic) to deal with the specifics of the changes relating to the lifting of the moratorium.

Furthermore, the Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic) is also to be amended as a result of the Petroleum Bill’s passing. Any petroleum production licence granted on or after 1 May 2018 is subject to a condition that the licensee must not supply petroleum recovered under the licence to an LNG exporter unless:

  • the licensee has first taken all reasonable steps to supply that petroleum to a domestic consumer on reasonable terms; and
  • there is no domestic consumer willing to buy the petroleum on reasonable terms.

What is considered ‘reasonable terms’ is to be set out in the Offshore Petroleum and Greenhouse Gas Storage Regulations 2011 (Vic). A petroleum production licensee who proposes to supply petroleum recovered under the licence to an LNG exporter will also be required to notify the Minister of the proposed supply.

Ban On Fracking Enshrined Into Constitution

Currently in the Legislative Assembly, the Constitution Amendment (Fracking Ban) Bill 2020 (Vic) (Fracking Bill) seeks to fulfil the Government's 2018 election commitment to enshrine the legislative ban on hydraulic fracturing (fracking) and the exploration/mining of coal seam gas in Victoria’s Constitution.  

The Fracking Bill proposes to entrench the bans by requiring that any repeal, alteration and variation must be passed by a special majority (three-fifths) of all Legislative Assembly and Legislative Council Members. The Fracking Bill will also make it more challenging for future Victorian parliaments to reduce penalties for non-compliance and the geographical locations to which the bans apply. 

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