Full of eastern promise
Readressing the balance of Australia’s energy boom

When it comes to working overseas, few countries make it as attractive for their residents as Australia. Until July last year, Australians working abroad for over three months a year were normally liable to pay tax in their country of work, not their home country. In the case of many energy-rich hubs such as the Middle East, this equated to a favourable fiscal situation with tax being non-existent or significantly lower than at home. What greater incentive could there be for seasoned oil and gas professionals to cast their net wider, in search for their next project?

Last summer’s new tax rules changed all that. Australian expatriate energy workers are now subject to Australian tax rates, wherever in the world they are stationed. The reality of this is that with few exceptions, energy professionals working outside their native soil are contributing virtually half of their income in income tax; a bitter pill to swallow for those used to forfeiting very little. For some, it means that the overall cost of being separated from family to work in demanding conditions begins to outweigh the benefit.

Australia’s new position on tax has put the concept of working overseas in perspective for many of the country’s energy elite. While some individuals have upped sticks to locations such as Singapore to enjoy a lower tax regime and avoid a drop in income, those with more permanent roots may be reevaluating what the Australian energy market has to offer.

East vs west

It’s by happy coincidence that the case for an energy career in Australia has never been stronger. Over the last 20 years, Perth has become a nucleus of energy development, primarily around the North West shelf and Timor Sea. As a result, western Australia has become a dominant force in the Asia Pacific oil and gas arena. But more recently, the east has begun to bridge the east–west gap in future energy opportunities.

Industry giants Exxon Mobil and BG Group were among the first to recognise the east’s largely untapped potential for energy production. Eastern development is positioning Gladstone as the next major presence on the LNG map, creating welcome competition in the domestic market.

Although taxation has taken some of the shine off the idea of overseas working, opportunities abound for Australian oil and gas professionals looking for more accessible assignments. Australia’s east coast is equally appealing for energy firms, who have a larger pool of experienced candidates to choose from.

But a word of caution: setting up in the east doesn’t mean operators should be any less competitive with rates of pay and benefits. With the majority of the country’s homegrown energy talent centred around Perth, a financial catalyst is needed to spark eastern migration. Ultimately, a project is only as successful as its people, meaning it still pays to pay well.

John Richards, CEO, Mentor IMC Group.

This article appeared in Upstream Magazine, 19th February 2010