Exxon doubles Australian profit on energy price boom

Exxon has posted a big lift in 2022 profits and highlighted its tax payments ahead of an expected crackdown by Labor in the federal budget.

ExxonMobil’s Australian arm nearly doubled profits in the 2022 financial year amid booming oil and gas prices, the latest energy major to deliver earnings ahead of a potential tax crackdown on the sector by the Albanese ­government.

The energy giant delivered a $2.95bn profit after tax for the 2022 financial year ending December 31, close to double the prior year’s $1.57bn profit number and a return to bumper earnings after a massive Covid-19-induced crash in energy markets in 2020 which saw it scrape a slim $69m return.

The bulk of a hefty 40 per cent bump in revenue to $20bn was attributed to elevated commodity prices, with its downstream refining operations accounting for half of that income, its stake in Chevron’s Gorgon LNG business a further 25 per cent and just shy of $3bn from its legacy offshore Gippsland operations in Victoria’s Bass Strait.

The company has been among energy majors criticised for paying little or no corporate tax, because they have been able to claim deductions for exploration and major investments in Australia.

However, the super major returned to paying corporate income tax in the 2022 financial year after a near decade-long ­absence.

Exxon Australia paid $820m tax during 2022 after “fully utilising” available tax losses, along with a further $831m in Petroleum Resource Rent Tax.

The company’s Australian arm said in September 2022 it had paid $740m in PRRT for the year ending June 2022 – including $260m for the last quarter – compared with $423m for the previous year.

Treasurer Jim Chalmers is expected to shake up the PRRT as part of a resources sector overhaul at the federal budget on May 9 amid political criticism that it has not done enough to capture taxpayer revenue from oil and gas companies, especially at a time of high energy prices.

The Greens are also agitating for change, saying if the PRRT was applied to onshore gas projects, plus a 10 per cent royalty on offshore projects, it would generate an extra $29.1bn for the budget out to 2025-26.

Australian gas producers are set to break their export supply record in 2023 after reaping $90bn in earnings last year – an all-time high.

Exxon also pointed to its role during the 2022 winter supplying gas to east coast markets at a time when a string of coal plants had broken down or were under maintenance.

“ExxonMobil Australia’s significant investments in major energy projects continues to ensure energy security for Australia, exemplified by Gippsland gas ramping up to cover coal outages and meet a lack of renewable baseload power in 2022,” the company said on Sunday.

“This was only made possible by a period of significant investment in major projects to provide much-needed energy for Australia, including development activities in the Gippsland Basin such as the West Barracouta project, which is delivering critical domestic gas supplies.”

New data released a week ago by industry body APPEA shows state and federal governments will benefit from $100bn in taxation receipts from gas export projects over the next two decades, the latest move by the industry to underline its fiscal clout and head off a government tax grab.

The October budget estimated the PRRT would raise $2.6bn this financial year, and $9.2bn over the four financial years to 2025-26.

Exxon in March 2022 pulled the trigger on a $400m investment in expanding gas development in the Gippsland Basin, in a move aimed at shoring up supplies for Australia’s southern states.

It also plans to develop a major carbon capture and storage project offshore Victoria’s Gippsland Basin, the latest push by the oil and gas industry to boost its green credentials.

Originally published as Exxon doubles Australian profit on energy price boom