Oil row widens WA-Canberra gulf

The gulf between the Western Australian government and Canberra continues to widen, with state mines and petroleum minister Norman Moore writing to local oil and gas companies for support to block plans for a single national oil regulator.

The dispute adds heat to the already bitter stand-off between WA and Canberra over royaltes, the mining tax, GST receipts and health funding.

The federal government has been pushing to create a single overarching regulator for the offshore petroleum industry for two years, and especially since last year's Montara oil spill in the Timor Sea.

However, the WA government has consistently opposed the move as an encroachment of the state's rights and its ability to oversee one of WA's key industries.

In August, federal resources minister Martin Ferguson said he would push through the plan to establish a single regulator by July 2012, whether WA agreed or not.

Currently, responsibility is shared between the state and federal governments, with state agencies carrying out the day-to-day oversight and regulation of activities in Commonwealth waters off the WA coast.

Mr Moore said his letter to industry explained the state government's view that the federal plan would strip regulatory responsibility from WA and hand it to Canberra.

"The state government believes in an efficient, consistent and fair system of petroleum administration, which is why it is opposed to the federal government's proposal," he said.

Mr Moore said an independent review of Canberra's proposal commissioned by the Department of Mines and Petroleum had instead suggested the federal government would be better off strengthening its role as an auditor of petroleum activity to improve the efficiency of regulatory approvals.

"WA proposes the establishment of a Federal agency to ensure existing regulators comply with best practice regulation," Mr Moore said.

Under WA's proposal, the states would continue to act as the designated authority overseeing all petroleum activity regardless of whether it occurred in state or commonwealth waters.

The role of the federal government would be to audit the performance of each state regulator to "ensure their competency and efficiency."

"The current system is not broken and has worked well for the past 50 years," Mr Moore said. "We should fix those areas which are cumbersome or outdated rather than jettisoning the entire regulatory regime."

Nonetheless, there has been wide-ranging support within industry for a single national regulator, which was a key recommendation of a 2008 Productivity Commission investigation.

The commission found that such a move would significantly reduce duplication and potentially save billions of dollars, as well as reduce the compliance burden on companies.