Australian natural gas industry seeks policy repairs to boost investment

Australia's natural gas industry executives are seeking more measures to restore an investment environment they say has been damaged by a series of state interventions to boost domestic supply and curb soaring energy prices.

While most executives at the Australian Energy Producers Conference in Perth were broadly in favor of the Australia Future Gas strategy unveiled by the government this month, they called for immediate action and improvements to the policy to avoid new gas supply shortfalls. "If you look at some of the policy changes that have occurred over the past few years, there are things that are, in many ways, eroding Australia's competitiveness," said Meg O’Neill, Chief Executive Officer & Managing Director, Woodside Energy.

Woodside was locked in a protracted dispute with workers last year over wages and working conditions. Though large scale strikes were averted, the public nature of the standoff sent global gas prices soaring and raised questions over the reliability of the country, last year's second-largest exporter of liquefied natural gas (LNG), as a steady fuel supplier. "The labor environment is a very challenging one, and getting more challenging over time," O’Neill told the conference.

Shell Australia's country head Cecile Wake said the Future Gas strategy "talks a lot" about the need to avoid gas shortfalls, but the industry was not "seeing tangible policies that promote the development of new supplies". "We have...long standing policies that just are no longer really fit for purpose, and what we need is for them to be reformed so that we get everybody pointing in the same direction," Wake told Reuters on the sidelines of the conference.

The Future Gas strategy came after the government faced criticism for its range of short-term measures to boost domestic gas supply and lower soaring energy prices, such as price caps and export limits from the country's three east coast projects.

Saul Kavonic, an energy analyst at MST Marquee, said the industry was glad to see the government acknowledging the importance of gas, but was waiting to see if actions would follow words. "A lot of damage has been done to Australia's reputation for investment for gas companies and trade partners. One document is the first step, but not solving it," Kavonic said.

Wake said Shell looks at a sustainable competitive advantage, strong customer demand, and stable fiscal and government policy support while looking for places to invest. "Historically, Australia could tick all three of those unequivocally. The last couple of years, it has been harder on the third box," she said.

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