ITF Briefing Paper

Australian LNG Exports to Boom, Tax Revenue is a Bust

Updated September 2016
By 2021, Australia's LNG export volumes are predicted to exceed those of Qatar, reaching 103.72
billion cubic metres (bcm) while Qatar's output falls to 101.7 bcm.

The Australian Government is expected to receive only AU $0.8 billion in PRRT revenues in 2019-20,
or 1.97% of LNG export sales. At the same time, the Government of Qatar is forecast to collect AU
$26.6 billion in royalties from LNG exports, equivalent to a share of 23.35%.

LNG exports: Australia

120 45

40
100
35

80 30

25
60
20

40 15

10
20
5

0 0
2011.0 2012.0 2013.0 2014.0 2015.0 2016.0 2017.0 2018.0 2019.0
Export volume (bcm) Val ue (bil l i ons AUD)

LNG exports: Qatar LNG exports: Australia

140 80 120 45
120 70 100 40
60 35
100 80 30
80 50
40 60 25
60 20
30 40 15
40 20 10
20 10 20 5
0 0 0 0
.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0
.0
11

12

14

15

17

18

11

12

13

14

16

17

18

19
13

16

19

15
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
20

Export volume (bcm) Value (billions AUD) Export volume (bcm) Value (billions AUD)

Government revenues from LNG exports in Qatar

Royalties levied on the two companies involved in LNG exports, Rasgas and Qatargas, account for a
third of total government revenues from natural gas production in Qatar. Government documents
show that in 2013-14, LNG royalties charged on exports of 104.26 billion cubic metres (bcm) came
to AU $17.68 billion.1

This is equivalent to 23.35% of the industry's export revenues.

Additional revenues streams include corporate income tax and returns on investments made by
state-owned companies in the sector. In 2015 alone, Qatar Petroleum's joint venture partner Shell -
which has only a 30% holding in one of the seven plants - paid almost US $1 billion in taxes,
production share and fees to Qatari government bodies. 2 Estimated combined total government
revenues from LNG production in 2013-14 is AU $53.67 billion. 3

In 2020, export revenues are forecast to be US $40-47 billion. 4 If the relationship between royalties
and export revenues remains constant, then under the conservative scenario used by the IMF, the
Government of Qatar would receive AU $12.54 billion in royalty payments from LNG export sales of
AU $53.73 billion.5

Government revenues from LNG exports in Australia

The unique characteristics of the oil and gas industry, namely the need to "collect an appropriate
return for the community from allowing private firms to exploit non-renewable resources", its
volatility and high capital requirements justify special treatment through the tax system. 6 The
primary instrument for this purpose in Australia is the Petroleum Resources Rent Tax or PRRT.
Analysis of PRRT revenues by commodity, and tax revenues from other sources such as income tax
that are attributable to LNG production, is not publicly available. This paper uses the PRRT as a
conservative measure to compare the Australian Government's revenues from its LNG export
industry with those of the Government of Qatar. Unlike the royalties cited above, PRRT includes
revenue from other oil and gas commodities, not just LNG, and applies to production for domestic
consumption as well as production for export.

In 2014-15, revenues from the PRRT, levied on all oil and gas production, were AU $1.87 billion. This
is equivalent to 10.9% of the value of LNG export revenues. 7

The value of LNG exports is set to increase from AU $17.14 billion in 2014-15 to AU $40.63 billion in
2019-20, an increase of 137%.8 Yet in 2019-20, the Australian Government's PRRT receipts from all
oil and gas production are expected to be only AU $0.8 billion, or 1.97% of LNG export sales. 9

As Australia becomes the world's largest exporter of LNG, as compared to Qatar, it is failing to
ensure a fair share of government revenues from the exploitation of our nation’s natural resources.
Data notes
Exchange rates and energy conversions used

USD : AUD 1.33

Qatari Rial : AUD 0.37
Mt : bcm 1.38

Data sources

Country Data name Years Source name

Qatar Export value all IMF Country Report 2015. Table 2, p28.
Export volume
Qatar (net) 2014-2025 BMI report
Export volume "US shale gas revolution", using data compiled from
Qatar (gross) 2006-2013 GIIGNL annual reports. Table 4, p19.
Historical data, REQ June 2016. Table 13 "Annual volume
Australia Export volume 2008-2015 of commodity exports"
Australia Export volume 2014-2021 Forecast data, REQ March 2016, "Selected exports"
Australia Export value 2014-2021 Forecast data, REQ March 2016, "Selected exports"
Historical data, REQ June 2016. Table 14(2) "Annual
Australia Export value 2008-2015 value of commodity exports (fob), continued"
Australia PRRT receipts 2014-2020 2016-17 Budget Paper 1. Table 7
Australia PRRT receipts 2008-2016 Taxation statistics 2014-15. Table 4: GST and other taxes

Data bibliography

Source name Bibliographic details

IMF Country "Qatar: 2015 Article IV Consultation - Staff Report; and Press Release", IMF
Report 2015 Country Report No. 15/86, International Monetary Fund, Washington, D.C., March
2015. Available at https://www.imf.org/external/pubs/ft/scr/2015/cr1586.pdf.

BMI report "Qatar Oil & Gas Report - Trade - (Pipeline and LNG) - Q3 2016", BMI Research -
Industry Forecast Scenario, 30 June 2016. Available from emis.com.

"US shale gas Fattouh, B., Rogers, H., & Stewart, P. (2015). The US Shale Gas Revolution and its
revolution" Impact on Qatar’s Position in Gas Markets. Center on Global Energy Policy:
Columbia University. Available at
http://energypolicy.columbia.edu/publications/report/us-shale-gas-revolution-
and-its-impact-qatars-position-gas-markets

REQ historical Renewable Energy Quarterly, Office of the Chief Economist, Department of
and forecast Industry, Innovation and Science. Available at http://www.industry.gov.au/Office-
data, March of-the-Chief-Economist/Publications/Pages/Resources-and-energy-quarterly.aspx#.
and June 2016

2016-17 "Budget Paper No. 1 - Statement 4: Revenue - Variations in receipts estimates",

Budget Paper Budget 2016-17, Commonwealth of Australia. Available at
1 http://budget.gov.au/2016-17/content/bp1/html/bp1_bs4-02.htm.

Taxation Australian Tax Office, Taxation statistics 2013-14. Available at

statistics 2014- https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-
15 statistics/Taxation-statistics-2013-14/
1Government of Qatar, "Expected Budget for Financial Year 2013-2014", January 2014.
Available at https://www.mof.gov.qa/en/DownloadCenter/Bugdet/Expected%20Budget
%20For%20Financial%20Year%202013-2014.pdf
2Royal Dutch Shell plc. (2016). Report on Payments to Governments for the Year 2015.
Available at http://www.shell.com/sustainability/transparency/revenues-for-
governments/_jcr_content/par/textimage.stream/1460962925009/43a62e840a312580b7a0
30a0b6719d720a03afb774d5edf22bc8f30914609748/shell-report-payments-to-
governments-2015-18042016.pdf
3Government of Qatar, "Expected Budget for Financial Year 2013-2014", January 2014.
Available at https://www.mof.gov.qa/en/DownloadCenter/Bugdet/Expected%20Budget
%20For%20Financial%20Year%202013-2014.pdf
4Fattouh, B., Rogers, H., & Stewart, P. (2015). The US Shale Gas Revolution and its Impact on
Qatar’s Position in Gas Markets. Center on Global Energy Policy: Columbia University.
Available at http://energypolicy.columbia.edu/publications/report/us-shale-gas-revolution-
and-its-impact-qatars-position-gas-markets. Figure 18, p32.
5"Qatar: 2015 Article IV Consultation - Staff Report; and Press Release", IMF Country Report
No. 15/86, International Monetary Fund, Washington, D.C., March 2015. Available at
https://www.imf.org/external/pubs/ft/scr/2015/cr1586.pdf. Table 2, p28.
6Henry, K. (2010). "Part 2: Detailed analysis - Chapter C: Land and resources taxes - C1.
Charging for non-renewable resources", Australia’s Future Tax System: Final Report.
Commonwealth of Australia. Available at
http://www.taxreview.treasury.gov.au/content/FinalReport.aspx?
doc=html/publications/Papers/Final_Report_Part_2/chapter_c1-2.htm
7"Budget Paper No. 1 - Statement 4: Revenue - Variations in receipts estimates", Budget 2016-
17, Commonwealth of Australia. Available at http://budget.gov.au/2016-
17/content/bp1/html/bp1_bs4-02.htm. Table 7.
8Forecast data, Renewable Energy Quarterly, Office of the Chief Economist, Department of
Industry, Innovation and Science, March 2016. Available at
http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Pages/Resources-
and-energy-quarterly.aspx#. "Selected exports"
9"Budget Paper No. 1 - Statement 4: Revenue - Variations in receipts estimates", Budget 2016-
17, Commonwealth of Australia. Available at http://budget.gov.au/2016-
17/content/bp1/html/bp1_bs4-02.htm. Table 7.