Mitsui gets nod for enhanced Waitsia gas proposal
Mitsui E&P Australia, part of Mitsui & Co, has received approval from the Western Australia Environmental Protection Authority to increase the number of production wells for its Waitsia gas project's second stage from eight to 19, enhancing operational flexibility and efficiency.
The project's description of production capacity has been revised to 91.25 petajoules per year, maintaining the same output.
The new Waitsia gas plant and pipelines, part of this onshore conventional gas venture, are located next to the existing Xyris Production Facility and aim to supply gas directly to Western Australia's domestic market.
The estimated project cost is between A$600 million and A$650 million.
Woodside Energy locks in big boost for WA gas supplies starting May 1
Starting next week, Woodside will increase its gas supply to the Western Australian market by 50 terajoules per day, which is about 5% of the state's demand.
This move comes in response to warnings from the Australian Energy Market Operator about potential gas shortages to the State in the coming years.
Recent industrial shutdowns have reduced some of the pressure, but challenges remain as the Karratha domestic plant, a major supplier, operates below capacity due to depleting gas fields.
Woodside plans to address these issues by enhancing output from Pluto and advancing commitments at the North West Shelf Venture.
High gas prices will shut down WA industry, Yara executive warns
Yara Pilbara Fertilizers executive, Jai Coppen warned the DomGas inquiry that high gas prices in Western Australia could lead to the deindustrialization of the region.
The economics and industry committee is examining domestic gas supply rules amid a projected significant shortfall within ten years.
Focus has been on LNG exporters and disputes over access to international markets for Perth Basin companies.
Jai Coppen, Yara's senior energy sourcing manager, highlighted that rising gas costs could force reductions in production at Yara, as their fertilizer and ammonia prices are already affected by global market issues. He confirmed predictions by the Australian Energy Market Operator that the industry could decline if gas prices reach $9.50 per gigajoule.
Stuart Nicholls, CEO of Strike Energy, criticized the local gas subsidy policy, arguing that it doesn't improve competitiveness for WA industry and mining, with the real beneficiaries being Yara's shareholders, not the local market.
Coppen also expressed concerns about the vulnerability of the manufacturing industry to disruptions, noting that recent outages at gas facilities had already forced production cuts at companies like Alcoa and Yara. The situation highlights the precarious balance of the gas market in WA.
DomGas Alliance says punters back State Government’s onshore export ban
The DomGas Alliance, is urging the State Government not to lift the export ban on onshore gas production. This comes as Premier Roger Cook considers revising the regulations during a Parliamentary Inquiry into the local gas market, which is facing a predicted shortage of up to 27% in the next decade according to the Australian Energy Market Operator.
The Alliance has submitted new evidence to the inquiry, arguing that onshore gas can be extracted profitably for $3 to $6 per gigajoule without needing to export. They highlight recent reserve downgrades by Beach Energy and Strike Energy and argue that the Perth Basin, with its smaller reserves, isn’t suitable for export and would require pooling of fields to achieve the scale needed for LNG.
Currently, offshore gas can be mostly exported, reserving only 15% for local use, whereas onshore gas connected to the state's pipeline must be entirely reserved for domestic use. There's increasing scrutiny over whether large LNG exporters are fulfilling their commitments to supply the local market.
A survey by Utting Research found that 84% of participants were concerned that oil and gas companies might be exploiting vague terms to shirk their local supply obligations, and nearly two-thirds believe that allowing onshore gas exports would hike household bills.
On the other hand, onshore producers argue that access to international markets is essential for the economic viability of their projects. DomGas Alliance chair Richard Harris contends that permitting exports from onshore fields would undermine the state’s industrial base and future economic growth, and could jeopardize the energy transition as the state plans to phase out coal-fired plants in six years to support renewable energy integration.
Parliamentary inquiry report says WA's domestic gas export policy no longer fit for purpose
A parliamentary inquiry in Western Australia has revealed that the state’s domestic gas policy, once considered a solution for energy issues, is now inadequate.
The policy, which helped keep gas supplies high and prices low during the eastern states' 2022 energy crisis, is failing to prevent potential shortfalls that could threaten significant economic activities and thousands of jobs in WA.
Peter Tinley, chair of the committee, noted that gas producers are only supplying around 8% of their exports to the domestic market, half of what is required.
The inquiry found inconsistencies in policy enforcement and lack of transparency, with some producers not adhering to their commitments.
The government is considering updating agreements or introducing new legislation to address these issues, while the possibility of allowing onshore gas export is being debated due to viability concerns from some companies.
The final report is expected in May, which will likely propose solutions to enhance policy effectiveness and ensure compliance among gas producers.
Roger Cook keeping an open mind about WA’s gas reservation policy amid calls to lift onshore export ban
Premier Roger Cook is considering potential changes to the state's gas reservation policy, pending the outcome of a parliamentary inquiry examining its effectiveness.
This inquiry is crucial as the government seeks to balance reducing domestic emissions with contributing to global decarbonization efforts.
The policy currently mandates that 15% of gas from offshore projects be supplied domestically, which has helped maintain lower energy prices locally.
Energy companies have urged the inquiry to lift the export ban on onshore gas, arguing that it would spur investment in the Perth Basin and address expected energy shortfalls.
At the WA Energy Transition Summit, Cook expressed his openness to revising the policy based on the inquiry's findings, which are expected by the end of May 2024.
Industry leaders, including Mineral Resources boss Chris Ellison and Woodside CEO Meg O’Neill, have highlighted the challenges and opportunities of the current policy.
Ellison is seeking a temporary exemption from the onshore export ban to develop a major gas plant, while O’Neill emphasized the importance of accessing both domestic and international markets for the viability of large gas fields.
The inquiry's outcomes could lead to significant adjustments in how Western Australia manages its gas resources, further influencing the stability and pricing within the domestic market.
Gas shortages to worsen: report
Western Australia is at risk of a significant gas shortage over the next decade, according to the 2023 Gas Statement of Opportunities report by the Australian Energy Market Operator (AEMO).
The situation could worsen after 2031 when the government plans to close its coal-fired power plants.
AEMO's analysis indicates that current gas supplies will be insufficient to meet domestic demand, projecting a shortfall of 105 petajoules by 2026.
This deficit could lead to shortages during supply disruptions or high demand periods, and has already caused a spike in gas prices from $2.13 per gigajoule in 2020 to around $10 per GJ.
The report underscores the pressing need for new gas supply investments to prevent energy shortages.
Demand for gas, especially for electricity generation in the South West and industrial processing, is expected to rise annually by 2.2% until 2033. Conversely, gas production is predicted to decline by 0.9% annually due to the aging of existing fields.
Despite the anticipated contribution from new projects like Strike Energy’s South Erregulla and Woodside Energy’s Scarborough, AEMO stresses that these won't suffice to meet the forecasted demand.
The impending closure of 1.6 gigawatts of coal-fired power and increasing electricity needs will further stress the gas supply, necessitating additional gas-fired power generation alongside a focus on renewable energy and battery storage.
The report comes ahead of a parliamentary inquiry into the domestic gas market, highlighting concerns over gas producers not reserving enough supply for domestic use, as mandated.
‘There is no replacement for gas today’: CME boss Rebecca Tomkinson fronts WA Domgas inquiry
Chamber of Minerals and Energy WA's chief Rebecca Tomkinson says that gas's role in the energy transition is not clear to most people, and more awareness of how the commodity helps the State move to cleaner energy is necessary.
Speaking at a parliamentary inquiry into WA's domestic gas policy, Ms Tomkinson supported the policy that mandates major producers reserve 15% of their output for local use, especially as supply concerns loom towards the decade's end.
Highlighting the necessity of gas in the transition period and expressing concerns that the public may not be fully aware of its ongoing role in the energy landscape up to 2030 and beyond, Tomkinson urged for better communication to match public expectations with future possibilities of energy sources, pointing out gas's relatively lower emissions compared to coal.
During the inquiry, questions were raised about enhancing public education on energy transition, to which Tomkinson responded that the CME and businesses have a significant responsibility to inform and guide the community through this transformation.
Her remarks followed statements from companies like South32 and Wesfarmers, which expressed concerns over gas supply certainty and called for more government action against high gas prices and market manipulation by large producers.
WA to probe gas reservation policy ‘not delivering’ for big users
A parliamentary inquiry is set to review Western Australia’s domestic gas policy amid concerns over transparency and enforcement, particularly focusing on whether the stipulated 15% gas reserve for local use is effectively reaching the market.
The inquiry, led by Labor MP Peter Tinley, aims to evaluate the policy’s relevance nearly two decades since its inception under the Carpenter government, in light of evolving global energy dynamics and a shift towards a net-zero economy.
Criticism from the DomGas Alliance highlights issues with the actual delivery of gas reserved for domestic use, despite compliance with the reservation requirement by LNG producers.
The inquiry will also scrutinize exemptions granted to specific projects like the Waitsia gas project, backed by Kerry Stokes' Beach Energy, questioning the consistency and impact of such exceptions on the overall policy.
Scheduled to conclude with a report by late November, the inquiry encourages engagement from LNG producers to ensure the state’s energy reserves support its long-term economic and environmental goals.
Norwest records early strong gas flows at Lockyer Deep
Norwest Energy has recently recorded a strong early gas flow during its perforation tests at the Lockyer Deep-1 exploration well.
Norwest Energy has recently recorded a strong early gas flow during its perforation tests at the Lockyer Deep-1 exploration well.
The well, located in the Perth Basin, is expected to have full production testing commence later this month.
Norwest and Mineral Resources subsidiary, Energy Resources, share the well as a joint venture (JV) as they verify the size and scope of the gas discovery. The JV is expecting the gas resource to exceed the pre-drilling high prospective resource of 1.1 trillion cubic feet.
The companies expect perforating operations conducted between March 10 and 12 within the 25km Kingia reservoir gross pay interval from 4041 – 4066 metres measured depth.
The Kingia pay zone was perforated in three wireline runs, with strong gas flows recorded through a 34/36” choke.
Gas samples have been recovered and the well is shut in with a wellhead pressure of 5122 psi.
“The rapid clean-upflowed by early, high flow rates confirms that we are dealing with extremely high-quality gas reservoir,” said Norwest Energy managing director Iain Smith.
Norwest said the Kingia pay interval will be fully tested once the necessary equipment arrives, with testing expecting to kick off March 25. Testing will run for six days, once completed the pressure temperature gauges will be recovered and the well will be suspended for future completion as a producer.
US bans Russian oil and gas
Two of worlds largest economies have placed strict sanctions on Russia, following its invasion of Ukraine. US president Joe Biden has signed an executive order to ban Russian oil, natural gas, coal and liquids.
Two of worlds largest economies have placed strict sanctions on Russia, following its invasion of Ukraine. US president Joe Biden has signed an executive order to ban Russian oil, natural gas, coal and liquids. Shortly followed by the UK blanket banning crude oil, increasing pressure on the Russian economy.
Last year alone the US imported 700,000 barrels of crude per day and petroleum products, leading to the ban depriving Russia of billions of dollars in revenue. The signed order also banned new US investment in Russia’s energy sector as well as any financing or enabling foreign companies to make investments.
The UK, however, will implement the ban in a more gradual phasing out of oil by the end of the year, but will continue importing gas and coal.
With all current disruptions, gas suppliers will remain sufficient until the end of this winter, even with supply disruptions from Russia.
This is significant news, knowing about 40% of the EU’s gas consumption is imported from Russia. Communications have released there would be a gradual decrease of Russian gas by steeply investing in renewables, hydrogen and biogas while also seeking alternative supply sources within the interim.
There remains an emphasis on commitment to the bloc’s Fit for 55 proposals. This would lower gas consumption by 30%, equivalent to 100 billion cubic metres by 2030, while also trying to reduce emissions by 55% by the same date.
“The energy efficiency first principle is more relevant than ever and should be applied across all sectors and policies, with demand response measures complementing those on the supply side,” the communication said.
“In the long run, the way to avoid high gas prices is to speed up – not slow down – our transition to a clean energy future.”
WA braces for gas supply crunch as Seven Group- backed onshore project eyes exports
The governing body of Australia’s main energy market says WA is more than likely to face a shortage of gas supplies from 2025.
The governing body of Australia’s main energy market says WA is more than likely to face a shortage of gas supplies from 2025.
Surging gas prices are ahead for WA as a looming shortage of an array of supplies unfortunately coincides with exports from a major project.
Many industry experts have claimed domestic gas prices have almost tripled in WA within the past two years and are continued to rise only leading to pressure on manufacturers and power prices.
Along with this many experts have also highlighted the decision the McGowan Government has made to allow a major project to ship 50 per cent of its reserves internationally. This decision is set to only worsen the situation.
Owners of the Waitsia project will have the ability to sell gas into lucrative overseas markets between 2024 and 2029.
These warnings come following the forecast by Australian Energy Market Operator (AEMO) that WA’s gas market could slide from abundance to shortage from 2025.
At the center of the forecast is the slowing down of the production at the North West Shelf in the States north-west.
AEMO also noted the delays I the development replacement projects including Woodside’s Scarborough reserve.
Published data demonstrates spot market prices in WA have increased from $2 a gigajoule in 2020 to close to $6/gj late in 2021.
There have been quotes for prices to reach $8g/j for 2026.
Richard Harris from the DomGas Alliance, said buyers are already feeling the rising market pinch.
Mr Harris highlighted price pressures would largely flow through households and businesses in the form of higher gas and electricity bills.
It is important to note however that some users were unable to pass on any price hikes and that is a notable limit to their capacity to absorb cost increases.
"In WA, gas is incredibly important. We use gas in all sorts of ways in WA and a huge number of jobs are connected with gas, so it's a vital part of our economy," Mr Harris said.
Strong year ahead as Mid West oil and gas projects gather momentum
An estimated $23 billion is expected to e projected into the WA oil and gas sector which is leading to predictions of a strong year for the Mid West resource sector- regardless of the presence of Covid-19 at a Yalgoo mine site.
An estimated $23 billion is expected to e projected into the WA oil and gas sector which is leading to predictions of a strong year for the Mid West resource sector- regardless of the presence of Covid-19 at a Yalgoo mine site.
Claire Wilkinson, director of Australian Petroleum Production and Exploration Association WA has highlighted a number of projects from Mingenew to Cataby as prime examples of a large industry investment. She claims that this investment is likely to result in setting up Australia as a clear standout region alongside the Middle East.
“It was a fantastic year and we look forward to more investment in WA and the Mid West in 2022 that will help create more local jobs, support the community and secure our cleaner energy future,” she said.
Projects that have broken ground include the Mitsui E&P’s $768 million Waitsia Gas Project in Dongara which is now in stage two development, Mineral Resources’ Lockyer Deep 1 project near Mingenew and Strike Energy’s Walyering-5 site near Cataby.
“Last year was a strong year for the natural gas industry, particularly in Western Australia, including the Mid West thanks to our significant resources and the ongoing demand for gas. The strength of the investment pipeline underscores the demand and long-term role of natural gas in powering our homes, hospitals, mines and businesses,” Ms Wilkinson said.
Mining and minerals processing to drive WA gas demand spike
Recently the WA Domestic Gas Alliance commissioned a report that claims the state government should focus on supporting development and ensuring the 15% supply obligation is adhered to by LNG producers.
Recently the WA Domestic Gas Alliance commissioned a report that claims the state government should focus on supporting development and ensuring the 15% supply obligation is adhered to by LNG producers.
The states domestic gas market continues to be well supplied but faces the possibility of change as supply is forecast to tighten in the middle of the decade, following a steep increase around 2025.
The report, produced and written by Wood Mackenzie, highlighted that gas demand in WA was 1068 terajoules per day in 2020. With this statistic in mind the breakdown of sectors demonstrates that manufacturing inherits the largest share of 33%, alumina and industrial at 21%, down the chain to only 12% used for the states power and 4% for residential and commercial purposes.
The demand in supply will lead to multiple new projects potentially being developed, including three lithium refineries.
The report makes comment that existing facilities that are on the noticeable decline should be utilised over greenfield development, however gas does need to be developed now in order to supply the higher industrial demands.
If producing is left to 2030 gas resources are more than likely to remain in the ground.
“Domestic Gas Commitment holders should be given a limited time frame – no more than three years – to market the gas still unsold under the 15% reservation policy,” the report said.
“There are still large volumes of commitment gas that have not been brought to market and the government should ensure this gas is not left in the ground,” stated the report.
WA Gas Market Strategic Development report
Commissioned by the Domestic Gas Alliance, the WA Gas Market Strategic Development report, was written by Wood Mackenize in order to provide an independent overview on the evolving dynamics of the WA domestic gas market.
Commissioned by the Domestic Gas Alliance, the WA Gas Market Strategic Development report, was written by Wood Mackenize in order to provide an independent overview on the evolving dynamics of the WA domestic gas market, specifically, the role of the domestic gas policy in an environment of a decarbonizing world. Wood Mackenzie designed the report to support ongoing policy discussions while promoting a collaborative avenue for gas producers, buys and the WA Government.
The report draws a number of conclusions on the future of the gas industry, with near-term demand anticipated to grow and become a likely pathway to reducing carbon intensity within the WA economy. The expected growth between 2021 and 2030 will remain compatible with the McGowan Government’s 2050 net zero emissions goal, while the new supply development that comes as a result will reduce coal demand, support renewable energy growth, displace high emissions imports, and support jobs within the domestic gas industries.
In 2020, the domestic gas demand in WA was approximately 1,068 TJ/d and utilised primary among six key sectors, as follows: alumina sector, industrial, iron ore mining, power sectors (SWIS), mining (gold, base metals) and the residential/commercial sector. It is important to note that of the gas consumed in WA, 58% is for industrial and heat processes and only 42% is for gas powered generation.
With the current projects under construction the domestic gas market is predicted to grow, there is even more growth potential over the 2025 to 2030 period with several large-scale projects at various assessment stages. These projects, if all proceed to development, would increase WA gas demand by more than approximately 690 TJ/d. current projects in development include three lithium hydroxide refineries and Fortescue Metals Group Iron Bride magnetite project. Projects currently undertaking FEED studies include a urea project and CSBP Kwinana Ammonia Expansion, while projects that are in the pre-FEED phase include urea, blue ammonia, greenfield methanol and brownfield alumina.
The WA resources sector is vital to supplying commodities that are critical to the transition of a lower carbon economy, the vast majority of these commodities include lithium, nickel, cobalt, mineral sand and rare earth minerals, alumina and iron ore. Specifically, gas directly supports the mining, processing and exportation of the important commodities as well as being a key feedstock for the production of fertilisers (ammonia and urea) which, importantly, can displace high emission fertilisers from overseas.
The WA Government’s Domestic Gas Policy is designed to secure the state’s long-term energy requirements by essentially ensuring an amount of gas considered for export is for local use and economic development. The LNG developers must comply with the policy as a condition to project approval. Each project agreement is slightly different, all include the following elements:
1. Reservation- reserve an equivalent of 15% of LNG production for domestic uses;
2. Infrastructure- develop and maintain access to supply infrastructure;
3. Marketing- show diligence and good faith in marketing to consumers.
Due to the long-term decrease in gas demands that will be experienced in the future, gas needs t be developed and marketed now, or risk remaining in the ground long term or risk never being commercialised.
Read full report
Read report key points
Read Policy Paper
Images from the report launch
Australia ready to fill European gas shortage should Russia cut off supply amid concern of war in Ukraine
Australia will seek to fill any supply shortfalls or gaps within the European gas market should Russia threaten to hold off supply due to tensions with Ukraine.
Australia will seek to fill any supply shortfalls or gaps within the European gas market should Russia threaten to hold off supply due to tensions with Ukraine.
Europe relies on Russia to supply about 40 per cent of its natural gas, with Germany’s numbers suggesting more dependence. This is leading to high concerns should the gas tap be turned off.
The United States has claimed it is in talks with Qatar to fill the gap, however Australia is more than willing to assist, as the largest LNG exporter globally.
Australia is one of the most reliable suppliers of LNG and any shortfall that may occur Australia will seek to fill it.
“We will of course continue to meet our existing contracts, but where there’s a shortfall Australia will always look to support our friends,” said the Resources Minister Keith Pitt.
While there is a reliance on Russia from Europe, it is well known that natural gas and oil are Russia’s two most important exports which would only see any deliberate supply shortage, damage its own economy.
“This is a one-dimensional economy, and that means it needs oil and gas revenues at least as much as Europe needs its energy supply,” the senior administration official told reporters.
What does net zero mean for Australia’s domestic gas market?
A number of speakers have been asked to address the issue of net zero in the lead up to the 2022 Australian Domestic gas Outlook conference.
A number of speakers have been asked to address the issue of net zero in the lead up to the 2022 Australian Domestic gas Outlook conference. This comes as a result of new found attention on emissions from fossil fuels following the Paris climate conference (COP21).
It is known that gas remains a vital part of most country’s energy, using it as a lower emissions alternative to coal.
What does the future hold for Australia’s gas sector in this transition, and how should it respond?
Defining net zero for the gas industry
“A true net zero by 2050 commitment would be a seismic shift for the gas industry. No new projects, no new gas infrastructure, reduced exploration; gas in Australia would be a sunset industry,” said Bruce Robertson, from the Institute for Energy Economics and Financial Analysis (IEEFA)
Maintaining standards of living and energy security
David Maxwell from Cooper Energy said, “Natural gas will continue to play an essential role in maintaining the energy security Australians are used to, even in a net zero future”.
“In 2021 alone our members signed 19 new gas supply agreements with domestic customers and announced more than $27 billion of investment in new projects to continue providing reliable and secure energy for Australia,” said Andrew McConville, CEO of the Australian Petroleum Production and Exploration Association (APPEA).
Gas as a low emissions energy source
Mr Davis believes natural gas is currently assisting industry and manufacturing reduce greenhouse gas emissions.
As a cleaner energy source, natural gas is pivotal to securing Australia’s net zero emissions future,” claimed Mr McConville.
Gas supporting the transition to intermittent renewable energies
A large majority see gas as vital to the transition of energy as it provides backup support for irregular renewables.
“Ongoing investment in maintaining natural gas supplies will be required to ensure Australians can continue to access the reliable supply of energy we are all used to,” said Mr Berman, who is confident that gas is essential as a power supply back-up in the transition.
Shelley Roberston from Mineral Resources added that gas will play a key role in providing reliable fuel when energy sources, such as solar and wind are unavailable.
Outlook for gas in a net zero future
It is noted that natural gas could provide as a fuel source for hydrogen and will be critical to the economy of Australia for decades to come.
The gas sector sees hydrogen as well as alternative fuels as key to their future.
The Australian Domestic Gas Outlook conference will bring together over 300 attendees and host high-level discussions that will help shape the future of domestic gas.
To see a full snapshot of the conferences content, view the agenda here.
Woodside Petroleum puts foot on new US gas supply
Woodside Petroleum has moved to further diversify its LNG supply by taking gas from a new producer within the United States.
Woodside Petroleum has moved to further diversify its LNG supply by taking gas from a new producer within the United States.
Woodside has entered into a non-binding heads agreement that allows them to buy 2 million tonnes of LNG a year from the proposed Commonwealth gas liquefication and export terminal. The terminal will be located at the mouth of the Gulf of Mexico near Cameron in Louisiana and is expected to open in 2026.
If the deal gets finalised, it would see Woodside take nearly 25 per cent of Commonwealth LNG’s export capacity of around 8.4 millions tonnes a year over a period of 20 years. This deal would also include the option to additionally purchase 500,000 tonnes a year.
“The head of agreement secures access to competitive LNG in the Atlantic Basin and provides Woodside with the ability to build market scale through acquiring low-cost supply,” said Woodside chief executive Meg O’Neil said.
Woodside sells more than nine million tonnes of LNG an annum under short and long-term contracts.
“Commonwealth LNG represents a next generation LNG export facility designed to provide a platform for meeting the unique requirements of the next wave of LNG demand,” its website says.
Strike officially spuds E1
Strike has begun drilling of the South Erregulla 1 and is said to be drilling ahead in the first hole section with a current depth of 1,045 metres.
Strike has begun drilling of the South Erregulla 1 and is said to be drilling ahead in the first hole section with a current depth of 1,045 metres.
The drilling will proceed to a depth of 1,945 metres before running 13-5/8” casing and cementing it.
South Erregulla is located in EP503 which adjoins EP469 where Strike has made conventional gas discoveries at West Erregulla.
The SE1 is less than five kilometres to the south of the nearest successful West Erregulla intersection.
The primary objective, of SE1 is to delineate approximately 350 PJs of high confidence resources in order to secure the gas requirements for the Project Haber, which is a Strike proposed fertiliser manufacturing facility located in Geraldton.
‘Gas-fired robbery’: WA LNG projects cheating Australians out of tax royalties, Australia Institute report finds
Two thirds of WA’s offshore gas projects pay close to no royalties or Petroleum Resources Rent Tax, creating a “gas-fired robbery” in an offshore heist that is cheating Australians out of a much-needed tax windfall.
Two thirds of WA’s offshore gas projects pay close to no royalties or Petroleum Resources Rent Tax, creating a “gas-fired robbery” in an offshore heist that is cheating Australians out of a much-needed tax windfall.
“What if you gave your house to a real estate agent and trusted them to sell it and they gave it away to a mate for free — it’s that outrageous,” Australia Institute principal fellow Mark Ogge said on Monday.
For several decades WA’s Northwest Shelf has had a royalties regime locked in. In 2020/21 the State Government collected $425 million in gas royalties, however there is still approximately two-thirds of offshore gas projects pay close to no royalties to the WA Government and no Petroleum Resource Rent Tax to the Federal Government.
It is important to note that offshore gas falls under the responsibility of the Commonwealth, meaning the income Australians could receive would come via the PRRT.
“Companies are basically banking their losses so that they never pay PRRT. Prelude, Gorgon, Wheatstone and Pluto don’t pay royalties or any PRRT so that gas is literally being given away for free and that gas belongs to the people of Australia,” Mr Ogge said.
Those projects make up close to two-thirds of gas production in WA.
The released report discovered that if the North West Shelf royalty agreements had been extended to all the LNG operations, than approximately $1.6 billion could have been raised in the 2019/20 period. In terms of revenue, this would have brought in an additional $1.06 billion to WA and $500 million to the Commonwealth.
In addition to the tax foregone, taxpayers have been subsidising the industry under successive governments, claims the report.
Both State and Federal Governments have been contacted for comment.