[Date]

FINAL
14.03.2021
INTEGRATED
PROJECT

ECO720-2012-2
EXPANSION OF BUSINESS IN AUSTRALIA

Team-4
Satyajit Baruah
Sanjeeb Kumar Mishra
Sanjeev Agarwal
Santosh Hirikude
Venkatesh Chilkewar
Sanjay Kumar Sahoo
1. Political, economic, and social risks of Australia:

The Australian economy experienced 26 years of continuous financial development, and

it was the solitary nation of the OECD that did not enter into recession during the
financial crisis, holding one of the greatest development paces of the world and being
the world’s 13th largest economy. Australia has a long history of oil and gas creation.
The progressing advancement of its significant stores is fortifying the nation's situation
as a main worldwide major part in the area. Oil and gas send out are a significant
supporter of the Australian economy.

1. POLITICAL:

In the property right index, 2020 country ranking, Australia stands in the 10 th Position,
13th position in the freedom from corruption index among 181 countries ranked.
Australia ranks 4th in the overall index on economic freedom. However, there is high risk
of corruption in the natural resource extraction sector. There is weakness in the
licensing process and “revolving door” of personal moving between government and
industry, as well as the hydrocarbon companies making huge donation to the political
parties.

The political Instability on rise at present in Australia. The Centre-right liberal-national

coalition led by Scott Morrison, started its third consecutive term in its office until 2022.
The prime minister continues his policy focus on tax cuts and maintenance of
government budget. However, the administration’s response to the 2020 bushfire by
unwillingly admitting that the climate change played a role combined with the strict
restriction in the Covid Pandemic fueled growing distrust among Australians. On the
external font, relationship with China worsened due to the controversies regarding the
origin of pandemic.
The Australian Government seeks a gas market that
 Benefits all Australian.
 Strengthens the Australian economy through liquified natural gas (LNG) export.
 Delivers competitive domestic price.
Competitively priced gas supply to the east coast domestic market. It needs east coast
LNG suppliers to:
 Supply uncontracted gas supply to the domestic market before exporting spot
cargo
 Regard the ACCC’s LNG netback price when offering gas domestically.

Specific government approaches to empower the investigation and production vary

broadly across states.
  Victoria introduces legislation permanently banning all onshore unconventional
gas exploration and development, however the Victoria government announced
in 2020 that it will lift its moratorium from 1st July 2021.

2. SOCIAL:

Health and Safety regimes:

 The state and territory have uniform legislation for petroleum health and
safety operations.
 Failure to meet the legislation may result in criminal penalties.
 Some jurisdiction creates additional health and safety obligation for the
operators to comply.
Environmental Impact assessment:
 The National greenhouse and Energy reporting scheme (2007), was introduced
to reporting and collecting corporate information. This scheme operates under
the national greenhouse and energy reporting act (2007) and is regulated by
clean energy regulator.
 There are specific government policies and incentives to meet the environmental
concern.

3. ECONOMIC:
In 2020, Australia’s GDP growth amounted to -4.16%, a decrease when compared to the
previous year due to COVID-19 pandemic and is expected 2.95%. The economy keeps on
being driven by business and government spending, while families and the shopper area
battle in the midst of low wages development (for the most part, consumer spending
addresses practically 60% of the economy).

The key macroeconomic and industry specific enablers are

 Proven hydrocarbon resource base: In terms of commercially exploitable
reserve, the country had about 2.6 billion barrels of crude oil and NLG reserve. In
addition, Australia has 68 trillion cubic feet of technical reserve of gas. Natural
gas reserve is estimated at 156 trillion cubic feet, accounting for 1.7% of global
gas reserve. The repeated success of discoveries of hydrocarbon resources in
Australia has built confidence across oil and gas industry that Australia is a
attractive province for exploration and development activity.
 LNG market opportunity: Increasing global demand for energy, has driven a
strong increase in gas demand. Australia has geographical advantage being close
to high growth Asian market and has been able to position itself technically and
commercially to meet the demand. Australia successfully attracted the oil and
gas majors and the key Asian LNG buyers to develop its gas deposits.
  Regulatory stability: Australia’s LNG success has been supported by
comparatively stable policy and regulation environment which underpinned the
significant long-term investment during the period 1999-2010.The stability in the
Australia’s taxation system was a key contributing factor in attracting this wave
of investment.

2. Legal, fiscal and regulatory environment and their future:

Australia Business Regulation:

1) Intellectual Property Law:

Intellectual property (IP) and other elusive resources that identify with working together
incorporate licenses, brand names, plans, and mystery cycles and formulae.

Australian IP law is intended to energize advancement and ensure organizations that

create unique IP to have an upper hand. Australia is likewise a signatory to various
peaceful accords that secure IP in different nations. IP Australia is the Australian
Government office that manages IP rights and enactment.

a) Patent Protection: An Australian patent gives a lawful option to prevent outsiders

from assembling, utilizing and additionally selling an innovation in Australia. It may
moreover be used to allow someone else to make a creation on agreed balance.

b) Trade Mark Protection: Australia has an all-around created general set of laws that
secures the intellectual property of organizations and people.

c) Registering a domain name: Web tends to finishing off with '.au' are enrolled in
Australia and are directed and controlled by the .au Domain Administration (auDA).

d) Design Protection: Australia has a legal system for the design of plans. A plan
application can be documented containing one plan, a solitary plan comparable to
numerous items, or different plans.

e) Copyright Protection: Australian copyright law is intended to empower and secure

those organizations which put their time and ability in the production of new material.
Australia is additionally a signatory to various worldwide shows that manage copyright.

2) Business and Environment Law:

Australian Government and state and domain government enactment exists to secure
purchasers, the climate and the local area, just as to advance reasonable exchanging
and rivalry.
a) Competition Law. The public legal structure of Australia is directed and implemented
by the Australian Competition and Consumer Commission (ACCC).

b) Consumer Law: The Australian Consumer Law (ACL) gives guidelines on unreasonable
agreement terms, purchaser rights ensure, item security laws, spontaneous customer
arrangements, lay-by arrangements and punishments, and different regions.

c) Product Liability Law: Australia has a public legal structure to manage item wellbeing
and data norms. These guidelines are intended to guarantee destructive items are not
advertised in Australia. The guidelines are upheld by the Australian Competition and
Consumer Commission (ACCC).

d) Environmental Law: Australia has a public legal structure to manage item wellbeing
and data norms. These guidelines are intended to guarantee destructive items are not
advertised in Australia. The guidelines are upheld by the Australian Competition and
Consumer Commission (ACCC).

e) Privacy Law: Australia has public protection enactment, administered by the Office of
the Australian Information Commissioner (OAIC), that controls how organizations can
gather, access, and store individual data and correspondence.

3) Australia Import Export Law:

The Australian Government has various strategies that look to create and help
Australian organizations associated with global exchange. Guideline likewise to secure
homegrown businesses, purchasers, and the climate from destructive and risky products
imported from abroad.

4) Financial Reporting:

a) Businesses in Australia might be needed to answer to the Australian Taxation Office

(ATO), Australian Securities and Investments Commission (ASIC) and Australian
Securities Exchange (ASX).

b) Companies working in Australia are needed to get ready and hotel monetary reports
with ASIC, ordinarily toward the finish of the monetary year.

c) Companies recorded on the Australian Securities Exchange (ASX) are limited by

consistent and occasional revelation rules.

d) Accounting Standards: Australian Accounting Standards are set by the Australian

Accounting Standards Board (AASB), an autonomous Australian Government office. The
norms are administrative prerequisites for enterprises.
The Australian Accounting Standards meet the necessities of the International Financial
Reporting Standards (IFRS). While a large part of the standard-setting is the duty of the
International Accounting Standards Board (IASB).

Fracking in Northern Territory:

The Northern Territory government has lifted its three-year moratorium on fracking and
has opened opportunity for future growth of the Australian gas production. The
government has accepted all 135 recommendations from the Scientific Inquiry into
Hydraulic Fracking (Inquiry), which must be implemented to achieve an acceptable level
of certainty that fracking operations will limit their potential adverse environmental
impact.
The Petroleum Legislation Amendment Bill 2018 was passed and introduces:
 Judicial review of decisions or determinations under the Petroleum Act 1984 and
the Petroleum (Environment) Regulations 2016;
 Need for the Minister for Primary Industry and Resources to be fulfilled that a
proposed operator is an "appropriate person" (meaning individual, corporation
or associated entity) to hold a permit or license under the Petroleum Act 1984,
with respect to past consistence history and execution; and
 Requiring adherence to a required Code of Practice under the Petroleum
(Environment) Regulations 2016.
The government has announced to legislate and regulate fracking operations and has
approved approximately AUD5.53 million over three years to doing so.

Strengthening domestic gas supply:

The Commonwealth Government has moved to shore up domestic gas supply by

announcing on 20 June 2017 the Australian Domestic Gas Security Mechanism. The
mechanism has been in effect since 1 July 2017 and will only operate for five years. To
improve supplies to the domestic market by 2020, the Commonwealth Government has
also provided funding to four new projects (supplying an extra 12.4 petajoules) under
the Gas Acceleration Program.

Pipeline reforms and rule change:

The Gas Market Reform Group has formulated a capacity trading reform package which
has been implemented in March 2019. The reforms apply to gas transmission pipelines
and include the introduction of a day-ahead auction of contracted, unnominated
capacity, standards for contract terms in transportation agreements to increase
fungibility of capacity products, and a platform for trading secondary capacity.

Improving transparency of east coast gas market:

The ACCC and Gas Market Reform Group (GMRG) delivered a joint paper in December
2018 on measures to improve the straightforwardness of the east coast gas market. By
improving the issue, market members will approach data needed to settle on educated
choices about gas utilization, creation, transportation, speculation and danger the board
in the short and since a long time ago run.

To improve transparency, the ACCC has also committed to publication of fortnightly gas
export parity prices as part of its ongoing inquiry into gas supply arrangements in
Australia. The publication was needed as numerous homegrown gas purchasers in the
east coast were getting offers at gas supply at costs that were well in abundance of LNG
netback costs. This meant that domestic buyers were paying more for gas produced in
Australia than overseas buyers. By publishing the LNG netback price, it will assist east
coast gas users in identifying trends in LNG netback prices and estimate an indicative
reference price of gas for supply over the near term.

Rules to the Offshore Petroleum and Greenhouse Gas Storage Regime:

With effect from 28 April 2020, a number of reviews have been made for the Offshore
Petroleum and Greenhouse Gas Storage Act 2006 and Offshore Petroleum and
Greenhouse Gas Storage (Regulatory Levies) Act 2003 (Cth). The changes include:
 Transferring regulatory oversight to NOPSEMA and conferring further powers on
NOPSEMA to inspect titleholders without a warrant.
 Imposing well activity levies on well operations management plans.

3. Competitive environment of the oil and gas industry and the behaviour of
environment for expansion in future:

Oil and Gas Industry Competitiveness Assessment of Australia:

From the pattern results, Australia has a general seriousness score of 6.4 out of 10, positioning
seventh on the Leader Board of worldwide companions, over the world middle of 5.5, and falling
behind the world best, the United States, at 7.3. Displaying and examination finds that upgrades
across a few need territories can improve this score by 15%, to line up with the world's ideal.
As per the ICS, Australia positions first on the planet in the Exploration period of the worth chain;
nonetheless, in the Development and Execution, Production and Abandonment stages, the nation
positions at, or beneath the world middle. For the business to be really serious, greatness should
go through the whole worth chain. Significantly for Australia, the business is moving from the
Development to the Production stage; accordingly, the spotlight ought to essentially be on
improving activities execution, with the end goal of building ability in the Abandonment stage. To
accomplish upgrades in Australia's general industry intensity distinguished four need regions
where changes in the present moment can influence the nation's presentation:
 a) Research and Innovation
Australia performs good in Research and Innovation, scoring over the world middle of 3.7. This
outcome negates mainstream discernment. Notwithstanding, as opposed to an indication of
Australia's solid exhibition here, this score features the relative position of Australia against the
investigation peer gathering of other oil and gas delivering countries, some of which have
generally helpless exploration and development capacities. A chance exists for Australia to gain
from driving countries in exploration and development including the US, UK, and Netherlands.

b) Workforce
The ICS's proportion of labor force seriousness thinks about both expense and quality. Australia scores
6.2, behind the world's ideal, China, with a score of 8.3. The harmony among cost and quality are
essential, while Australia's expenses are among the most noteworthy on the planet, the current quality
is of a high standard. Across the worth chain, upgrades in the capacity of Australia's labor force can
help generally speaking seriousness score by 3.34%. As Australia's industry moves from the
Development and Execution stage into Production and Abandonment stages, there are huge dangers
and openings. The country's labor force should profit by this progress and become the world chief in
oil and gas activities.
c) Regulatory Reform
Australia's Government and Public Involvement score is 6.1, similar to the world middle, and gives
plentiful space to progress. Australia performs very well in the public authority strategy and
insight region; nonetheless, the administrative part is a critical region of shortcoming and presents
the best chance for generally improvement. Changes here could have 3.23% on generally
intensity, the second biggest in this analysis. Complexity, duplication and "administrative noise"
increment costs and expand time spans for all members.
d) Other Opportunities
Public Perception
Information that was accessible from the World Bank Public Perceptions Survey on Extractive
Industries tracked down that, in Australia, 41% accept the business doesn't decidedly affect the
climate and 24% accept the business doesn't emphatically affect nearby networks. While this
information recommends Australia has opportunity to get better, without a worldwide
informational index it is absurd to expect to comprehend the country's relative presentation.
Cost Cutting
Industry administrators have gone through the previous two years cutting expenses
and decreasing labor force numbers. While the expense diminishes have permitted
administrators to remain beneficial, it's anything but a feasible choice and doesn't
assist with building Australia's serious edge in the more drawn-out term. Industry
administrators need to ceaselessly improve and smooth out their tasks. Aside from
doing this inside, there is added advantage to expand intensity through working
together with different administrators, providers and partners.
 4. Commercialization prospective of expansion and their behavior:

The Liquefied Natural gas (LNG) industry is encountering low costs and oversupply.
Indeed, even before the COVID-19 pandemic, the LNG market was set for oversupply in
2020 and 2021 as new activities kept on developing limit well past consistent interest
development. Diminished gas request in light of the pandemic has added to
overabundance supply, making market instability. Also, a supported time of lower oil
costs and expanded rivalry among gas supply sources as new stockpile arrives at the
market have joined to dissolve edges, squeezing gas and LNG makers.

LNG players should center their endeavors in five territories: capital proficiency,
inventory network streamlining, downstream market improvement, decarbonization,
and computerized and progressed investigation. Whenever done effectively, LNG could
brave an unusual market and discover openings for quicker development.

The rise of huge scope North American LNG trades has made it simpler for ease US gas
to arrive at Asia's LNG bringing in business sectors. What's more, sequential rushes of
new LNG supply limit from Australia, Russia, and the United States have driven the
market into relentless oversupply. In this serious market, gas shippers can arrange lower
gas costs even comparative with low oil costs.

what COVID-19 means for bringing in business sectors, 2020 gas request could fall by 4
to 7 percent—by a wide margin the biggest interest stun in over 50 years.

A speed increase of LNG request development requires LNG makers to make huge
interests in new downstream framework, including import terminals, pipelines, and
force plants.

While a large number of Australia's key achievement empowering factors are as yet
significant today, we predict difficulties not too far off that could undermine Australia's
capacity to keep up its phenomenal history in pulling in global oil and gas venture.
The Australian oil and gas industry is viewed as a significant expense business climate
when contrasted with numerous other worldwide purviews. Regarding investigation and
creation, the Commonwealth Scientific and Industrial Research Organization (CSIRO)
assessed in 2017 that the normal expense of boring an inland investigation well in
Australia is more than over multiple times that in the US. In terms of seaward turns of
events, it was assessed that improvement costs per unit of North West Shelf holds had
expanded by more than 11-overlap from 2004 to 2013. On both a CAPEX and OPEX per
boe premise, Australia falls in the base portion of similar oil furthermore, gas creating
nations.

Currently, Australia sits moderately high up along the worldwide LNG cost bend
comparable to other major LNG creating countries. Qatar has an unmistakable expense
advantage over other worldwide LNG projects because of its minimal effort base for
gaseous petrol creation. Coordinated undertakings getting feed gas from huge
traditional assets (e.g., Arctic LNG-2, Tortue) appreciate a comparative expense
advantage.

For different undertakings that fall inside the serious scope of US$7-8/mmBtu (with
conveyance to Asia), cost decrease activities have played a critical job. In the US LNG
area, there has been proceeded with descending tension on LNG plant EPC costs (i.e.,
towards US$700/ton and beneath). Likewise, Rovuma LNG has pushed towards lower
EPC expenses to keep up its expense seriousness against the US.

Australia's significant expense work, frequently topographical distance of its framework,

and outrageous climate related occasions will proceed to sway the danger profile of
future and existing downstream, and underutilized LNG limit (i.e., both at present and
undermined in the future) would increment downstream unit costs.
Australia's present position stays helpful for drawing in upstream speculation. A move
towards less universally serious monetary terms could move it close by less monetarily
alluring nations, for example, Iraq, Brazil, and Angola in the opposition for capital
without the monster scope assets and economies of scale offered by these a-list
hydrocarbon territories.

Keeping up current degrees of tax assessment and lessening the volume of monetary
and administrative change would almost certainly reinforce Australia's case as an
appealing upstream purview and permit the nation to address the approaching
difficulties welcomed on by the following decade of LNG rivalry.

REFERENCES:

1. https://www.marketforces.org.au/politicaldonations2020/
2. https://www.governmentnews.com.au/global-index-shows-australia-seen-as-
increasingly-corrupt/
3. https://www.ganintegrity.com/portal/country-profiles/australia/
4. https://appea.com.au/wp-content/uploads/2020/06/Australia-Oil-and-Gas-
Industry-Outlook-Report.pdf
5. https://www.nera.org.au/ReportsandPublications/Attachment?
Action=Download&Attachment_id=149
6. https://www.mckinsey.com/industries/oil-and-gas/our-insights/the-future-of-
liquefied-natural-gas-opportunities-for-growth
7. https://www.industry.gov.au/data-and-publications/impact-of-
commercialisation-australia-on-business-performance
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9. https://www.austrade.gov.au/International/Invest/Guide-to-investing/Running-
a- business/Understanding-Australian-business-regulation
10. https://uk.practicallaw.thomsonreuters.com/w-011-0184?
transitionType=Default&contextData=(sc.Default)&firstPage=true#co_anchor_a9
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