Volume model to calculate petroleum royalty
There are 4 liable classes of petroleum, each with a separate rate. Learn about swap arrangements and benchmark elections.
Royalty is calculated by applying a prescribed rate to the volume of liable petroleum produced during a return period.
Different rates apply to the 4 classes of petroleum:
- domestic gas
- supply gas
- project gas
- liquid petroleum.
Petroleum is produced when it is released or recovered to ground level from a natural underground reservoir. Your petroleum royalty liability is based on the volume of liable petroleum produced in a return period.
The volume model is used for calculating petroleum royalty. Under this model, you need to determine:
- the total liable volume of petroleum produced during the period
- the classification (e.g. domestic gas, supply gas, project gas or liquid petroleum)
- the royalty rate that applies to each class of petroleum.
These position papers will help you to determine your royalty liability under the volume model:
Swap arrangements
Swap arrangements may be relevant for determining the classification of gas and average sales price for petroleum.
See the Commissioner of State Revenue’s determinations on swap arrangements from:
Benchmark election
When calculating your petroleum royalty rates under the volume model, you may elect in your return form to use the benchmark price for a particular petroleum type as the average sales price on an ongoing basis. To end a benchmark election, you must complete an application to end benchmark election (Form R2.10). The Commissioner will consider the reasons why you want to end the election.
Also consider…
- Find out about petroleum and gas tenures.
- Read about penalties and interest.
- See the transitional arrangements for petroleum royalty.
- Learn about lodging royalty returns.
- Read the petroleum guide for QRO Online.