A report prepared for the Turnbull government into the petroleum resource rent tax has confirmed fears, first revealed by Fairfax Media in 2015, that revenue from offshore gas will continue to flatline until at least 2027.

The federal government is going to make sure energy giants pay their share of tax with Treasurer Scott Morrison announcing a Parliamentary inquiry. (Vision courtesy ABC News 24)

Despite that, Treasurer Scott Morrison insisted on Friday that Australians were not being shortchanged, but said the government would consider some changes to the system.

The review of the PRRT by former treasury official Mike Callaghan has acknowledged there are systemic problems and recommended changes to toughen the system for new LNG projects.

But, in a clear victory for the $200 billion industry, he shied away from urging any major changes for projects already past the investment stage, including Chevron's giant Gorgon and Wheatstone ventures and Shell's Prelude project.

The Callaghan report was released amid the political wrangling over east coast gas supply and on the same day the Senate inquiry into corporate tax avoidance grilled LNG bosses in Perth.

Chevron Australia chief executive Nigel Hearne outlined for the first time when the combined $80 billion Gorgon and Wheatstone projects would start paying company tax and PRRT, claiming there was an "incorrect perception" in the public that the company would not pay its fair share.

Chevron predicts it will start paying the petroleum resource rent tax some time between 2029 and 2035, he said, and would eventually contribute between $60 billion and $140 billion over a 50-year project lifespan.

The company – which has paid no company tax for five of the past seven years – would become a top-five taxpayer by the middle of the next decade, he said

"Don't judge us by the first few years of the boom; judge us by the life cycle of the project," he said.

Mr Callaghan's report – which recommends the Treasury take months to engage in a "considered, comprehensive and consultative process" over changes – has provided Treasurer Scott Morrison the political cover to retreat from prior signals the government would present a PRRT fix in the May budget.

When he announced the Callaghan review in November, Mr Morrison said of the PRRT "we think it is a problem", and set the time frame to allow for budget measures.

But on Friday he said any changes would be considered "outside the current budget".

"The report finds the decline in PRRT revenue does not, in itself, indicate the Australian community is being shortchanged in receiving an equitable return from the development of its resources," Mr Morrison said.

The petroleum industry mounted a fierce lobbying effort against changes to the PRRT.

A month after the review was announced, Prime Minister Malcolm Turnbull's then deputy chief-of-staff, Brad Burke, was hired by Shell, one of the companies that met Mr Callaghan and government ministers.

Former resources minister Ian Macfarlane, who now heads the Queensland Resources Council, met Mr Callaghan, as did Craig Emerson who helped design the PRRT with economist Ross Garnaut for the Hawke Labor government.

The PRRT is based on capturing "super profits", something that concerns tax transparency campaigners because of the ease with which multinational resource companies can move money between jurisdictions.

Last week, Chevron lost a Federal Court appeal in a profit-shifting case brought against it by the Australian Tax Office. The court found the company avoided paying $300 million in tax in Australia via steep interest payments on a $2.5 billion inter-company loan made from the low-tax jurisdiction of Delaware in the United States.

In his 180-page report, Mr Callaghan found the PRRT, which had been designed with oil extraction in mind, worked differently for LNG, which requires larger investments and "much longer periods before they become cash positive".

The "uplift rates" applied to exploration and capital costs – which are carried forward and grow by up to 15 per cent a year – allow companies to write off their investments against positive cash flow when a project starts producing.

The industry holds a stockpile of $238 billion in tax credits, which some academics believe will shield major companies from paying any PRRT for decades.

Mr Callaghan confirmed this, saying: "High uplift rates for deductions, combined with periods of subdued oil prices, may mean that deductions compound over the life of a project such that the project may never pay PRRT."

Modelling for the review found the sector would pay just $12 billion in PRRT by 2027. In that period, sales to such markets as Japan, South Korea and China could conservatively top $400 billion.

But Mr Callaghan found much more PRRT would be paid between 2027 and 2050, up to $105 billion in total, or $3.2 billion a year.

By comparison, Qatar, which is currently the world's biggest LNG exporter, is forecast to take $26.6 billion through its flat, volume-based royalty in 2021, when it will sell the same amount of LNG as Australia.

Mr Callaghan did not recommend implementing a royalty as companies had invested under the PRRT system.

"Any significant increase in the tax on existing petroleum projects may substantially increase perceptions of the fiscal risk associated with investments in Australia and may deter future investment," he said.

"Fiscal certainty is an important factor influencing a country's investment attractiveness."

Mr Callaghan split his recommendations in two, saying Treasury should rein in uplift rates applied to new projects, and the outcome could be "substantial changes to the PRRT regime".

But for current projects he recommended a list of smaller changes, such as streamlining paperwork with the ATO.

The Tax Justice Network, which has spearheaded research into the PRRT, said the changes would make it easier for companies to claim deductions and transfer credits between projects.

"It appears reducing paperwork for multinational corporations has been prioritised over protecting the Australian community and our shared interest in these resources," Tax Justice spokesman Jason Ward said.

"This report and the response from the Treasurer will only increase community concern over the integrity of the PRRT and represents a significant missed opportunity."

Mr Callaghan is expected to be called to front the Senate inquiry looking at PRRT.