Gas ex­port re­stric­tion ‘poses risk’

The Courier-Mail - - BUSINESS - GLEN NOR­RIS

THE Fed­eral Govern­ment’s plan to re­strict gas ex­ports will dam­age Aus­tralia’s rep­u­ta­tion among Asian in­vestors, ac­cord­ing to Korean en­ergy gi­ant Ko­gas.

Ko­gas Aus­tralia di­rec­tor Insu Woo told an Aus­tralia-Korea Busi­ness Coun­cil con­fer­ence in Bris­bane yes­ter­day that plans for a do­mes­tic gas re­serve would im­pact on Aus­tralia’s sov­er­eign risk.

Sov­er­eign risk refers to un­fore­seen changes in govern­ment pol­icy that hurt the prof­itabil­ity of in­vest­ments by for­eign com­pa­nies.

“Aus­tralia is a very strong and sta­ble coun­try,” said Mr Woo, whose com­pany is a joint ven­ture part­ner in Queens­land’s GLNG project.

“(How­ever,) the gas reser­va­tion will cre­ate some con­cerns for in­vestors who are look­ing for op­por­tu­ni­ties in Aus­tralia.”

The Aus­tralian Do­mes­tic Gas Se­cu­rity Mech­a­nism (ADGSM) was in­tro­duced on July 1 in re­sponse to gas short- ages for lo­cal man­u­fac­tur­ers and house­holds.

It re­quires LNG projects draw­ing gas from the do­mes­tic mar­ket to limit ex­ports or find off­set­ting sources of new gas in the event of a short­fall.

Ko­gas, the world’s sec­ond­largest cor­po­rate buyer of LNG, holds a 15 per cent stake in the $24 bil­lion GLNG project near Glad­stone, along­side part­ners San­tos, Petronas and To­tal.

There are in­dus­try con­cerns long-term gas ex­port con­tracts could be in jeop­ardy be­cause of the reser­va­tion pol­icy in the ADGSM. For­mer San­tos ex­ec­u­tive Peter Cleary told the con­fer­ence that the move to re­strict gas ex­ports would be in­cred­i­bly dam­ag­ing to Aus­tralia’s rep­u­ta­tion in Asia.

“A quar­ter of Aus­tralia’s gas goes to Korea but with this reser­va­tion pol­icy we are just say­ing the for­eign­ers can deal with it,” said Mr Cleary (pic­tured), who now runs his own en­ergy con­sul­tancy busi­ness.

“It is al­most xeno­pho­bic. I think we owe our gas cus­tomers an apol­ogy.”

Mr Cleary said the pos­si­bil­i­ties of do­mes­tic gas short­ages had been known about in 2010 but noth­ing had been done by var­i­ous gov­ern­ments.

“It is a pity in Aus­tralia that we need a cri­sis be­fore we act,” said Mr Cleary. “The re­sult is a pol­icy that is ad hoc.”

Con­cern over the reser­va­tion pol­icy’s im­pact on ex­porters such as GLNG comes as do­mes­tic man­u­fac­tur­ers such as Incitec Pivot con­tinue to fret over a short­age of lo­cal gas sup­ply.


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