Oil and Gas Sector

Mr VAN HOLST PELLEKAAN (Stuart) (14:17): My question is to the Minister for Mineral Resources and Energy. Can the minister explain why an application for a petroleum exploration licence from Ambassador Oil & Gas was accepted when it did not meet the 'stated criteria for evaluation of the applications' as required by the Petroleum and Geothermal Energy Act?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:17): I don't accept that. I don't know where he is quoting from. Perhaps he can provide that to the house.

Mr VAN HOLST PELLEKAAN: Mr Speaker, the act says in section 23, paragraph (b) that the minister must have regard for 'the adequacy of the applicant's technical…resources'.

The SPEAKER: And the question is?

Mr VAN HOLST PELLEKAAN: And the Government Gazette, which sought tenders, said, 'the most important criteria for assessment of C02010 (a), (b) or (c) work programs are' and on the list is 'the applicant's past performance in fulfilling work program commitments elsewhere in Australia'.

The Hon. A. KOUTSANTONIS: In that question he asked earlier, he quoted someone saying that the applicant was not acceptable. I would like to know where he got that quote from and if he could provide it to the house, because he provided it to the house as evidence of his question.

Mr VAN HOLST PELLEKAAN: I will read the question again.

The SPEAKER: No, you don't need to read the question, but you may wish—the minister will be seated—in framing your next question to include an answer to the minister's challenge, or not.

Mr VAN HOLST PELLEKAAN: It's not what I said.

The SPEAKER: Does the minister wish to give a further answer?

The Hon. A. KOUTSANTONIS: Yes, sir, I do. The question the opposition are asking, in effect, is: how did Ambassador Oil win a bid? So, I'm going to run through it and try and give some technical advice to the opposition. Three new PELs in Cooper Basin were offered in 2010 by the South Australian government on the basis of work program bidding. The CO2010 acreage release was opened in April 2010 and, at close of bidding on 10 March 2011, 11 bids were received from six national and international explorers. Block C, which became PEL 570, attracted six bids.

All applicants were provided with details of the scoring system to ensure an open and fair process. The receipt and assessments of the bids is governed by strict policies and procedures. Ambassador's work program scored the highest of the six program bids. Ambassador's five-year work program bid included eight exploration wells of 200 square kilometres 3D and 300 kilometres 2D seismic, I am advised. PEL 570 has potential for accumulations of oil and gas in conventional reservoirs as well as gas in deep unconventional reservoirs.

In terms of technical capacity, Ambassador Exploration was represented by Tino Guglielmo, who subsequently became Director of Ambassador Exploration and who was appointed to be the managing director of the company subsequently floated on the ASX. Mr Guglielmo had many years prior extensive experience in the oil and gas sector, including 20 years at very senior levels with Santos, and then as managing director and CEO of Stuart Petroleum.

Further, Mr John Davidson was the exploration adviser, and he had over 25 years of experience at very senior levels within the industry, including Exxon. In terms of their financial capability, key personnel had demonstrable experience in raising capital in respect of the oil and gas sector at a time when share markets were relatively receptive to upstream petroleum capital.

I want to talk about how the tenders are done. Competitive tenders are opened by a bid receipt team (BRT) that extracts the bid details for scoring by a separate bid assessment team (BAT). The BAT assessment bids are done without the applicant's identity. Total bid scores for each bid are calculated and ranked by the BAT. The applicant's financial and technical capacity to compliantly and competitively conclude the guaranteed extent of the work programs is a routine part of the assessment process. A recommendation is then made to the minister's delegate. The delegate then makes the determination based on all criteria.

The applicants for these exploration licences include companies ranging from small private companies to ASX-listed entities with up to $1 billion market capitalisation. The process is very robust. In terms of the question—which is why was this company awarded an exploration licence—it is because they won the bid, independently assessed by the regulator, who—

The SPEAKER: The minister's time has expired. Member for Stuart.