In a submission to the Senate committee investigating the move, the upstream industry body said the excise meant future investment decisions to either enhance or expand production at fields that have exceeded 30 million barrels of excise-free production now faced a different risk/reward framework.

It added that as the excise system does not allow a deduction for incurred costs, this could lead developers to consider alternative investments.

APPEA also said that condensate producers would need to look at a range of compliance and verification obligations, and recommended similar principles that exist for crude oil production should also be used in defining condensate production areas.

It added the extension of the crude oil excise undermined economic efficiency and could force gas producers to charge higher gas prices to underpin or support project economics in areas where the excise is payable.

The North West Shelf Venture, which will be hardest hit by the removal of the excise exemption, also lashed out in a submission to the committee, warning the move had undermined Australia's reputation as a low-risk nation for significant investment.

The NWSV said the Government had not taken into account the rising costs of developing upstream oil and gas projects, adding that while global oil and prices had risen significantly, most of its output was sold locally or tied to long-term contracts.

APPEA backed the NWSV, saying the changes could negatively influence investors' perceptions of Australia's sovereign risk and reduce its ability to attract further investment.