Intervention sends the wrong message
Chevron’s Australia boss says pressure on governments to intervene in the oil and gas industry is sending a bad signal to investors.
Last week Nigel Hearne said the high cost of doing business in Australia and higher company taxes already presented a challenge.
“Pressure being placed on governments for policy interventions such as the petroleum resources rent tax, bans on oil and gas drilling and mandated local content quotas send the wrong signal to investors,” Mr Hearne told a Committee for Economic Development of Australia breakfast in Perth last week.
He said policy change should encourage investment, not retrospectively affect project economics nor compromise Australia's international competitiveness.
“New LNG projects — wherever they are — won’t get past the planning stage unless they’re economically competitive for buyers and sellers, while providing benefits to host communities and governments,” Mr Hearne said.
The Federal Government is conducting a review of the PRRT amid claims big oil and gas companies are using its deductions to avoid tax.
On Australia’s east coast energy shortage, the Chevron Australasia managing director said policy makers should look to the US shale gas industry, which turned that country from a net gas importer to a net gas exporter.
“The conditions were right for the US shale revolution: the geology was well understood, the expertise and supporting infrastructure was in place and property owners stood to gain royalty revenue,” he said.
“But critically, the regulatory system was conducive and there was sufficient support from local communities and property owners to get projects up.
“There’s no reason why this can’t be replicated on Australian soil, and very quickly if we look at the US example.”
Mr Hearne said communities, industry, manufacturing and the environment would benefit from unlocking undeveloped gas resources.
The Gorgon Project commissioning cargo.