Rick Wilkinson
OGJ Correspondent

MELBOURNE, May 14 -- This week's Australian federal budget has closed a tax loophole, ending an excise exemption worth more than $500,000 on the production of condensate.

Biggest losers are the North West Shelf joint venture partners, which have been producing the gas fields off Western Australia for the past 25 years. Condensate has been a lucrative byproduct obtained with little effort.

However the new Labor Party government reported that it will remove the oil excise exemption for condensate beginning this week. The move is expected to add $564 million (Aus.) to federal government revenue during the next financial year (2008-09) and about $2.5 billion over the next 4 years.

Condensate production from NWS fields and those onshore will be subject to the same excise rates as those applicable to all petroleum fields discovered since Sept. 18, 1975.

Under previous arrangements the first 30 million bbl of oil produced from a field was exempt from excise duty. Past production of condensate will now contribute to reaching that threshold.