The Federal Government will not overhaul the way oil and gas companies are taxed on their massive LNG projects, rejecting claims they have gamed the system at the expense of Australian residents.

After an inquiry by former senior Treasury official Michael Callaghan, the Government will today confirm only some minor changes to the Petroleum Resource Rent Tax.

Lobby groups had hoped the inquiry would back major changes to the tax and especially the way firms were avoiding PRRT by using massive deductions to write off their tax liabilities.

The Australian Tax Office estimates gas companies have $250 billion worth of deductions they will be able to use to minimise their tax.

Despite record amounts of LNG production, PRRT revenues have been falling. Treasurer Scott Morrison will today say the report does not back any change to crude oil excise or Federal royalty schemes.

Major oil and gas companies had been fearing a Budget raid.

Chiefs from Woodside, Chevron, BP, Shell, BHP Billiton and ExxonMobil will have to defend the current regime when they are grilled by senators at a hearing into corporate tax avoidance today in Perth.

Tax reform activists say WA faces dwindling royalties from North West Shelf gas.

The Tax Justice Network — a coalition of unions, aid, welfare and environmental groups — claims gas from areas adjacent to the North West Shelf’s original project boundaries but brought onshore using existing infrastructure will not be subject to the same royalty split between Canberra and WA.

The Federal Government has told WA gas companies they will not be affected by export restrictions applied on the east coast.