Taxation and Pricing of Natural Gas: The Dutch Transition to a Gas Market Hub and Lessons for Australia’s Integrated Gas Projects

Posted: 9 Jul 2020

See all articles by Diane Kraal

Diane Kraal

Monash University - Monash Business School

Machiel Mulder

Centre for Energy Economics Research, University of Groningen

Peter Perey

University of Groningen - Faculty of Economics and Business

Date Written: January 3, 2020

Abstract

The Australian government receives poor revenue returns from the Petroleum Resource Rent Tax (‘PRRT’), a tax regime that applies to integrated offshore, gas projects. By contrast the Netherlands has captured significant tax revenues from gas. We ask whether Australian government PRRT revenue would increase from an alternative method of gas pricing (known as the gas transfer price) by modelling four large gas projects. The Dutch case explains their gas market evolution and how high revenues have been maintained. We find that Australia’s current PRRT regulated pricing method for integrated gas projects is problematic and change is needed. The Dutch case study contextualises the discussion of an alternative gas transfer pricing method for offshore gas projects in Australia. The energy justice framework is used for analysis. This article contributes to the current government review of the PRRT regulations on the gas transfer pricing method.

Keywords: Australian taxation, petroleum, The Netherlands gas, gas transfer pricing, resource rent tax, tax review, energy justice, fiscal policy

JEL Classification: H25, H21

Suggested Citation

Kraal, Diane and Mulder, Machiel and Perey, Peter, Taxation and Pricing of Natural Gas: The Dutch Transition to a Gas Market Hub and Lessons for Australia’s Integrated Gas Projects (January 3, 2020). University of New South Wales Law Journal, Vol. 43, No. 1, 2020, Available at SSRN: https://ssrn.com/abstract=3628876

Diane Kraal (Contact Author)

Monash University - Monash Business School ( email )

26 Sir Monash Drive
Caulfield East
Melbourne, 3145
Australia
03 9903 2144 (Phone)

Machiel Mulder

Centre for Energy Economics Research, University of Groningen ( email )

Postbus 72
9700 AB Groningen
Netherlands

Peter Perey

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

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