The Australian Petroleum Production & Exploration Association (APPEA) is calling for the Junior Minerals Exploration Incentive (JMEI) to be expanded to include junior oil and gas explorers.
In the industry voice’s submission to JMEI, it has also asked that the expansion to be extended for a further four years with $200 million in funding being allocated the JMEI extension.
APPEA has stated that it is Australia’s ability to attract scarce and mobile capital that will create employment opportunities, infrastructure development, wealth creation in regional Australia and increased government revenues.
The JMEI supports the investment environment for junior explorers, allowing them to attract scarce and mobile capital in the international competition.
Outlined in its submission, APPEA highlighted how the exploration investment and activity has underpinned the strong contributions made by Australia’s oil and gas industry.
“However, the strong economic headwinds faced by the Australian economy will challenge the investment environment for junior explorers and the right investment settings are now more critical than ever,” chief executive Andrew McConville stated in the submission.
The challenges faced by junior explorers are different to larger companies that are generally able to fund activities from their own profits, putting smaller companies at risk.
“Where the JMEI is extended for a further four years, APPEA also recommends that paragraph 418- 80(2)(b) be removed,” APPEA explained.
This paragraph works to exclude expenditure on petroleum (oil and gas) exploration activities from being included in the definition of “eligible expenditure”.
As a result, APPEA stated that expenditure on petroleum exploration activities cannot be converted to exploration credits and in effect, precludes junior petroleum explorers from accessing the JMEI.
Due to the impacts of COVID-19, many Australian businesses and explorations companies are seeing delays to exploration and appraisal programs, resulting in limited access to capital.
APPEA reinforced that Australia’s success as a supplier of petroleum has even made possible by a long-term commitment to exploration.
“Australia needs to maintain a stable, attractive policy environment to reverse the decline in petroleum exploration investment,” McConville said.
“Exploration will underpin this stabilisation and recovery work program and will continue to be a vital cog in Australia’s economic recovery. COVID-19 will challenge many junior explorers’ ability to continue to attract scare and mobile capital and without access other stimulus package benefits such as JobKeeper, may not survive these unprecedented times.”