Topic:

No compensation for cancelled exploration rights

Subject:

Oil and gas

Country:

Australia

Type:

Case report

Date:

2 February 1998

Reporter:

Robert Pritchard,
Pritchard Udovenya
Sydney, Australia
Fax: 61-2-9223-8299
e-mail: pritch@mail.rpi.net.au

News item:

The High Court of Australia has denied compensation for the cancellation by statute of an offshore petroleum exploration permit in the Australia-Indonesia Zone of Cooperation (the "Timor Gap").  The Court held that the cancellation extinguished the permit but, because the government did not acquire any benefit in doing so, the cancellation was not an acquisition of property.  Commonwealth of Australia -v- WMC Resources Ltd (1998) 72 ALJR 280.

Reporter's note: It is unlikely the same conclusion would be reached for petroleum extraction licences.  This case is another reminder of the vulnerability of investment prior to the grant of the legal right to produce and take away petroleum or minerals.