BHP allows room to talk

Australia's proposal for a 40 per cent tax on resources profits offers "room for negotiation", Resources and Energy Minister Martin Ferguson says.

"This is a genuine consultation process, we are listening," Ferguson said in a speech at the Australian Petroleum Production and Exploration Association conference in Brisbane at the weekend.

BHP Billiton, the world's largest mining company, and Rio Tinto Group said they would review Australian projects after the Government announced the tax plan on May 2. Santos and Origin Energy have said they may delay investment decisions on their planned liquefied natural gas ventures in Queensland.

Returns from the ventures exceeding the rate on long-term Australian Government bonds, less than 6 per cent, would be taxed as "super profits" under the proposal. Stephen Robertson, Queensland minister for natural resources, said the rate was "far too low" and that the tax should "kick in" after 11 per cent.

"This is not the best time to put a new tax on the table," he told reporters at the conference. Robertson said he was concerned the tax might delay the state's LNG developments.

Companies developing coal-seam gas-to-LNG projects in Queensland "were the first people in the door" after the tax plan was unveiled by the Government, Ferguson said. Discussions with companies about the tax were continuing, he added.

Ferguson identified the tax measure and oil spills off Australia and in the Gulf of Mexico as the "elephants in the room" at the meeting of executives from oil and gas companies.

"It will take a long time to rebuild confidence in the industry" after the Montara oil spill in the Timor Sea, Ferguson said, adding that the oil leaking from a BP well in the Gulf of Mexico "has served to deepen this crisis of confidence".

- BLOOMBERG