Onshore petroleum licences

The Petroleum Act 1998 provides a framework for the regulation of onshore petroleum exploration and development activities (excluding transmission pipelines). The Act addresses licensing, approvals and other issues including compensation, rehabilitation and royalties.

The Act seeks to ensure that petroleum exploration and development have regard for economic, social and environmental interests.


Note that coal seam gas is regulated under the Minerals Resources (Sustainable Development) Act 1990.

Licence requirements

Onshore oil and gas exploration, development and production approvals are issued and administered under the Petroleum Act 1998. Petroleum is defined as any naturally occurring mixture of hydrocarbons, whether it is in a gaseous, liquid or solid state; and includes hydrocarbon mixtures with sulphide, nitrogen, helium or carbon dioxide.

It does not include coal seam gas which is regulated under the Mineral Resources Development Act 1990.

Tenements granted under the Petroleum Act 1998

Flow chart showing the tenenent process from start to finish.

Exploration permit

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

The Minister for Resources publishes areas of vacant acreage from time to time in the Victoria Government Gazette, inviting tender applications for exploration permits.

The tendering process allows up to 6 months for the applicants to examine data available before lodging applications based on offers to perform specified work programs. Additionally, anyone can request us to release a particular area of interest.

The respective merits of the work programs; applicant's financial and technical ability to carry out the proposed work program; and any other criteria mentioned in the tender are taken into account in granting a permit to the successful applicant.

In granting the permit, certain elements of the work program submitted are declared as key objects. The permittee should 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%.

The Permit Conditions and Administration Guideline provides information to assist industry in managing the administration of an exploration permit under the Petroleum Act 1998. The criteria used by the department to assess applications are also outlined.

Retention lease

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

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 the petroleum production at any time during the term of the lease.

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

A production licence continues in force for the life of the resource or until 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. The Minister may exempt a gathering line from provisions from the Pipelines Act 2005 and consent to its construction.

Special access authorisations

A special access authorisation gives the holder the right to carry out petroleum exploration, as specified in the authorisation, but does not include the right to drill a well, or rights to petroleum in the area.

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

Other approvals

An authority holder must comply with other requirements before petroleum operations are carried out including, in specified circumstances:

  • Obtaining consent from a landowner or occupier
    As per Petroleum Act 1998 section 128
  • Obtain consent of the Minister
    As per Petroleum Act 1998  section 138
  • Holding an accepted operation plan
    As per Petroleum Act 1998  section 161 and Petroleum Regulation 2011 Part 2
  • Obtaining and maintaining insurances
    As Petroleum Act 1998 per section 171
  • Submitting a rehabilitation bond
    As per Petroleum Act 1998  section 173

All tenements issued under the Petroleum Act 1998 can be varied, or transferred to another party, with the approval of the Minister.

Page last updated: 19 Mar 2021