Commercial Australian crude oil price-rise urged

Press, 12 April 1978, Page 14

Commercial Australian crude oil price-rise urged

NZPA Melbourne The Australian Federal Government has been asked to allow Australian crude oil orices to rise to current world levels by a speaker at the annual conference of the Australian Petroleum Exploration Association. Mr Rich Charlton, general manager of Shell Australia’s exploration and production group in an address about oil industry finance and the influence of the Government on the industry, called for the Government to lift controls. | Western Europe and Japan Shave already made the transition to higher oil prices, as i charged by the Organisation iof Petroleum Exporting i Countries. “It is inevitable that Australia must do the same. The longer we delay, the more difficult the adjustment will be,” said Mr Charlton. The price of Australian produced crude oil is currently set by the Federal Government. The current price for Australian crude from Bass Strait is about 600 c a barrel (including 300 c a barrel excise) compared to the posted O.P.E.C. price in the Persian

Gulf of about 1300 c a barrel. The Bass Strait producers, B.H.P. and ESSO, receive i m p o r t-parity (currently 1262 c a barrel) for part of their production, less excise, and for the remainder, 233 c a barrel, making an average price of 296 c a barrel. From June 30 this year a higher portion of the Bass Strait crude will be priced at world parity, but the remaining portion will still be at 233 c a barrel, plus 300 c a barrel excise. Oil from Barrow Island, Western Australia, is priced about 640 c a barrel net to the company, and 300 c a barrel excise, making the price 940 c a barrel. Mr Charlton said that the time had come for the oil industry to question very seriously the level of Government interference and control. “ft is my view that the petroluem industry in Australia is burdened with an unnecessary weight of rules,regulations and administrative guidelines — some-

times of dubious legality and some of them of doubtful wisdom,” he said. Mr Charlton said that crude oil pricing, plus the accompanying absorption and allocation formula, now was a complex system which required a large staff of public servants to administer. “Much of this is unnecessary, and indeed is probably detrimental to Australia’s long-term energy interests,” he said. • Mr Charlton said that he would be unrealistic and impractical to suggest that the Government withdraw completely. Its role should be only to provide the framework and establish the broad rules under which the exploration industry could get on with the job. “In my view, it is not the proper function of the Government to set up Stateowned enterprises, financed with taxpayers’ money to take part in exploration activities,” Mr Charlton said.