Onshore oil and gas authorities

The Petroleum Act 1998 (the Act) provides the regulatory framework for onshore petroleum (i.e. oil and gas) exploration and development activities, excluding transmission pipelines. The Act addresses licensing, approvals and other issues including compensation, rehabilitation, access to Victoria’s petroleum geological information and royalties.

The Act seeks to ensure that onshore oil and gas exploration and development have regard for economic, social and environmental risks, benefits and impacts, taking into account the views and interests of Victorians during decision-making.

In addition, under Victoria’s Climate Change Act 2017 the minister must consider climate change impacts in determining whether to grant or refuse authorities.

Legislation

Notes:

  1. Petroleum is defined as any naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state, and includes hydrocarbon mixtures with hydrogen sulphide, nitrogen, helium or carbon dioxide.
  2. Petroleum does not include coal seam gas, which is regulated under the Mineral Resources (Sustainable Development) Act 1990. This Act prohibits the exploration and mining of coal seam gas in Victoria.
  3. Hydraulic fracturing is prohibited during any petroleum operation.

Authority requirements

Onshore oil and gas exploration and development authorities are issued and administered under the Petroleum Act 1998. The relevant authorities are required when targeting petroleum. The Act allows for variation, suspension or extension, and exemption from compliance with conditions. All applications are considered on a case-by-case basis.

Authorities granted under the Petroleum Act 1998

Exploration permit

An exploration permit authorises the holder to carry out oil and gas exploration and do anything necessary for, or incidental to, this purpose.

Applications for exploration permits are only available when the minister invites tenders for acreage that has been released. Tender applications are published in the Victoria Government Gazette. Read more about acquiring petroleum acreage in Victoria.

Under the Act, the minister is required to undertake public consultation about a proposed acreage release before inviting tender applications. Refer to our have your say page for proposed acreage releases currently open for public consultation.

The tendering process allows up to six months for applicants to examine the data available before lodging applications based on offers to perform specified work programs.

The work program must set out what activities will be carried out, when those activities will be carried out, and the estimated expenditure of carrying out those activities.

The respective merits of the proposed work program and the applicant's financial and technical ability to carry out this program are taken into account, along with any other criteria mentioned in the invitation, in making a decision whether to grant a permit.

In granting the permit, certain elements of the work program submitted are declared as key objects. To have an exploration permit renewed, the permittee must ensure that these key objects are achieved to the maximum extent that is practicable.

An exploration permit is granted over a maximum area of 12,500 square kilometres and for a period of five years. The permit can be renewed once for another five years with a reduction in area of at least 50 per cent.

Retention lease

The holder of an exploration permit can, after making a petroleum discovery, apply for a retention lease within the permit area.

The Act requires the applicant to publish a notice detailing the retention lease application. The notice must state that any person may make a written submission to the minister about the application during the period prescribed in the notice. Find retention lease applications currently open for feedback.

A retention lease enables the holder to retain certain rights to a petroleum discovery where it is not currently commercially viable to develop but might become viable within 15 years.

A retention lease can be granted for a term of up to 15 years and cannot be renewed.

The minister may request the lessee to re-evaluate the commercial viability of petroleum production at any time during the term of the lease.

Subsequently, if the minister is of the opinion that petroleum extraction is commercially viable, the minister may direct the lessee to apply for a production licence for the purpose of extracting the petroleum.

Production licence

A production licence authorises the holder to produce and explore for petroleum from the licence area and to do anything that is necessary for, or incidental to, this purpose.

The holder of an exploration permit or a retention lease can apply for a production licence within the permit or lease area. The minister can also invite applications for a production licence over an area, which is not part of any exploration permit or retention lease, where a reservoir is already known to exist.

The Act requires the applicant to publish a notice detailing the production licence application. The notice must state that any person may make a written submission to the minister about the application during the period prescribed in the notice. Find production licence applications currently open for feedback.

A production licence continues in force until it is surrendered or cancelled.

The holder of a production licence can construct pipelines (gathering lines) to convey petroleum from one place to another within the licence area. In accordance with section 83 of the Act, the minister may exempt a gathering line from certain provisions of the Pipelines Act 2005.

Special access authorisation

The holder of a special access authorisation can undertake oil and gas exploration in the authority area but cannot make a well.

A special access authorisation may be granted over any area. However, if there is an exploration permit, retention lease or production licence in force over the area, consent must be sought from the holder of the authority that will be overlapped before the special access authorisation can be granted.

A special access authorisation is granted for a period up to one year and can be extended (once only) for a further year.

Special drilling authorisation

A special drilling authorisation may only be applied for by the holder of an authority under the Act, or the holder of an authority under the Offshore Petroleum and Greenhouse Gas Storage Act 2010, for an area that is adjacent to the existing authority.

The special drilling authorisation gives the holder the right to carry out petroleum operations (i.e. drill or operate a well), but not the rights to petroleum in the area.

If the special drilling authorisation will overlap an existing authority, consent must be sought from the holder of that authority before the special drilling authorisation can be granted.

A special drilling authorisation continues in force until it is surrendered or cancelled, or the adjacent existing authority is no longer in force.

Administration matters – dealings and transfers

A dealing has no force until it is approved and registered for an existing title.

Applications to transfer a title must be submitted for approval and registration in the petroleum register. A transfer has no force until it is approved and registered.

Transfer applications must be accompanied by:

  • the instrument of transfer in the prescribed form executed by each registered holder and transferee, and
  • details of the technical qualifications of the transferee(s), the technical advice available to the transferee(s) and financial resources available to the transferee(s).

For further details, contact Earth Resources Regulation.

Page last updated: 06 Sep 2022