By ERWIN CHLANDA
Royalties have temporarily stopped flowing to the NT Government and Arrernte traditional owners for gas from the Palm Valley fields west of Alice Springs, in the wake of reduced production.
After using Central Australian gas for some 25 years Power and Water Corporation (PWC) mostly switched to the Italian company ENI in 2010 which produces gas offshore in the Joseph Bonaparte Gulf.
Less than 10% of PWC’s needs continued to come from Palm Valley but this ended in January this year.
Merv Cowie, operations director of the Magellan Petroleum Australia Limited, which is the owner and operator of the field, says royalties – to the government as well as the Aboriginal interests – are paid on the wellhead value of the gas.
That is calculated by the revenue less production costs which at present exceed the revenue.
However, Mr Cowie says Magellan has a 15 year contract with Santos, production will be stepped up again next year and royalty payments are expected to resume.
Mr Cowie says the size of these payments are commercial in confidence but the government rate is 10%.
A spokesman for the NT Government says it does not release those figures.
The rate for the traditional owners is not being disclosed, says Mr Cowie.
He says the field has been in production for 28 years. As is usual for gas fields producing under their own pressure, it is highest at the beginning and drops as gas is removed.
The gas is delivered to Santos via the Amadeus pipeline which runs from Palm Valley to Alice Springs, Tennant Creek, Katherine and Darwin.
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