Dutton’s energy intervention call to arms gets circumspect response from Santos boss

Santos boss Kevin Gallagher has played the diplomat after Opposition Leader Peter Dutton urged an energy industry rebellion against government intervention.

A spirited call by Opposition Leader Peter Dutton for industry to take the fight to the government over gas market interventions and tax changes has met with a somewhat muted response from the sector, with Santos managing director Kevin Gallagher saying his preference was for a bipartisan approach to policymaking.

Mr Dutton, in a televised address to the Australian Petroleum Production and Exploration Association (APPEA) conference in Adelaide on Thursday, urged the industry to “fight for yourselves” against what was “one of the most interventionist governments in our nation’s history’’.

However Mr Dutton, and opposition resources spokeswoman Senator Susan McDonald, who attended the conference in person, did not commit to trying to block proposed changes to the petroleum resource rent tax (PRRT), announced in last week’s federal budget, when they are brought before parliament.

Peter Dutton wants the oil and gas industry to oppose government intervention. Picture: Martin Ollman

Senator McDonald was scathing of the intent of the policy, however when challenged on whether the Liberal Party would oppose its passage, she said they had “not yet seen the legislation’’.

Mr Dutton, in his address, promised to roll back the government’s gas market interventions and changes to the PRRT if elected to government, and said other measures announced as part of last October’s budget were “an all out attack on the gas sector”.

He cast the battle as a fight between his party, which ascribed to the “magic of the marketplace” in the words of former US president Ronald Reagan, and a Labor government which “wants gas gone’’.

When he was asked whether the industry would join a potential public relations battle against the passage of the PRRT legislation, Mr Gallagher did not buy in, saying “well, wait and see’’.

“I just hope, and I’ve always said, I look for bipartisan support for our industry,’’ he said.

The industry has been locked in a lobbying and public relations battle with the government over issues, including interventions such as the $12 per gigajoule price cap and feared large changes to the PRRT, which affects the tax rate on offshore oil and gas earnings.

Liberal Senator Susan McDonald. Picture: Gary Ramage

However, Mr Gallagher and others have commented that the government now appears to be gaining a better understanding of the role gas will play in the transition to net-zero carbon emissions, while the industry generally was relieved at the watered down version of the PRRT changes which found their way into the budget papers.

The Santos chief said the industry did need to make the case for the role it plays in the economy more forcefully in the court of public opinion.

“As an industry, we’ve sought to keep our head down and try to stay out of the firing line, but we’re in the firing line and so we do have to fight back but I don’t think that’s going to war with everybody,’’ he said.

“But I do think standing up for ourselves means that we have to be there telling our story and making sure that people understand the benefits of gas and that the need for gas will be here for a long time.’’

On the political front, Mr Gallagher said regulatory stability was the key issue.

“When I speak to my Japanese and Korean, Malaysian, French partners, they are all very concerned with the rate of change and the rate of market interventions,’’ he said.

Santos chief Kevin Gallagher addresses the conference on Thursday. Picture: Morgan Sette

“So whatever happens now I think we need stability going forward and I’ll be working with both sides of politics to try and encourage them.

“I think that the government’s beginning to understand the critical role that gas has to play and I’ve heard the Prime Minister make very positive comments recently about gas.

“I’ve heard (Climate Change and Energy Minister Chris Bowen) make comments about gas.

“So I’m confident that debate, if you like, is moving in the right direction.’’

Mr Gallagher said there had been a number of interventions in the market, “but we have to live with those’’, and Santos was focused on getting on with the job.

When asked whether the interventions could be considered a success or a failure, Mr Gallagher said arguably they could be called a success because prices had come down – but the bigger issue was investor certainty.

“The challenge then is encouraging new investment and new supply, and ultimately the only way we’re going to sustainably get gas prices to as low as they can go is by bringing more supply into the market, that’s just Economics 101, right?

“And so ... I don’t think it’s been a success from that point of view.’’

Mr Gallagher said as long as price caps exist in any form, it made it difficult for an investor to make large, long-term commitments, “because you don’t know what price world you’re operating in’’.

In her closing address at the conference, APPEA chief executive Samantha McCulloch said in the past couple of weeks there had been, “some significant policy developments and achievements that in some cases are the culmination of years of hard work and advocacy’’.

These included the government commitment to developing the Future Gas Strategy, a review of the regulatory environment for carbon capture and storage, and “the recognition of our industry’s already significant contribution to government budgets and the need for long-term fiscal stability that underpinned the relatively modest changes to the PRRT’’.

Ms McCulloch also reiterated the industry’s need to tell its story better, with APPEA to start rolling out a public awareness campaign in coming weeks.

Originally published as Dutton’s energy intervention call to arms gets circumspect response from Santos boss