Call for policy stability to attract new oil, gas investigation
Australia’s upstream oil and gas industry needs long-term regulatory stability to create attractive investment opportunities and maintain the industry’s strong economic contribution, according to new research commissioned by APPEA.
A report by energy research and consultancy Wood Mackenzie said the industry’s success from 2009 to 2012 was predicated on relatively few regulatory and fiscal changes in the previous decade, which provided a strong foundation for a wave of unprecedented investment.
The scale of this investment, including the establishment of Australia’s LNG projects, worth approximately $350 billion, has delivered direct and indirect economic benefits to the Australian economy, the Australia Oil & Gas Industry Outlook Report found.
WA’s Department of Jobs, Tourism, Science and Innovation’s April LNG report said Australia was the second-largest LNG exporter in 2019, accounting for 21 per cent of global LNG exports.
WA accounted for 12 per cent of global LNG exports and 59 per cent of Australia’s LNG exports in 2019.
The State’s first LNG project, the North West Shelf, marked 30 years of LNG exports in 2019.
High gas prices in the 2000s prompted a major investment in WA’s LNG industry. The State has five operating LNG export projects: The North West Shelf, Pluto, Gorgon, Wheatstone, and Prelude.
But Woodside, hard hit by falling oil prices, has delayed decisions on the Browse and Scarborough gas projects.
APPEA Chief Executive Andrew McConville said while the report was completed before understanding the full impacts of COVID-19, and the oil price at its lowest levels in 20 years, it remained relevant as Australia shifted focus to economic recovery and global reintegration.
Mr McConville said the report showed the volatile investment environment in which the industry operated was putting more than the resources industry at risk.
“A lack of investment will have economic flow-on effects to communities and businesses we work with, making it counter-productive to the economic recovery phase that this country will need to embark on,” Mr McConville said.
“Australia has an opportunity to secure the next wave of investment which has the potential to deliver upwards of $50 billion in capital expenditure and secure up to 6,300 jobs across the life of a project and an estimated $80 billion in taxation receipts.
“We are the world’s leading LNG exporter – an industry worth $350 billion – however, there have been no LNG sanctions since 2012 and we risk losing investments.”
Wood Mackenzie Vice President Energy Consulting, Asia Pacific Chris Graham said: “Our analysis found the stability of the regulatory and fiscal environment in the years prior to investment was key to oil and gas majors with strong balance sheets and development capability making long-term commitments to the country.”
Writing in The Australian, Mr McConville said that increasing red and green tape was making the already high cost of doing business in Australia prohibitive.
“Voices seeming to believe we can tax our way to prosperity are growing louder,” he said. “And a lack of awareness that we compete for capital with countries more supportive of investment means Australian projects just might not make the cut.
“The Wood Mackenzie report identifies that since 2000 Australia has had 60 significant legislative changes, inquiries and reviews impacting the oil and gas industry — 41 of them in the past nine years.
“Much of this activity has resulted from a deliberate campaign by activists and their political allies to delay and disrupt an industry that has operated without significant environmental impact for more than 50 years while engaging in predominantly constructive, collaborative and mutually beneficial relationships with landholders and other users of the marine environment.”