Don’t expect big fall in gas prices: Woodside
Woodside Petroleum CEO Peter Coleman says big gas users should not expect dramatic falls in prices.
Woodside Petroleum said big gas users should not expect dramatic falls in prices amid a government-linked plan that proposes using cheap supplies to boost the nation’s dwindling manufacturing base.
A leaked report from the National Covid Co-ordination Commission estimates up to 412,000 new jobs could be created by 2030 through the gas boost spread across mineral technologies, steel, petrochemicals, food and ammonia manufacturing.
However, with the report suggesting long-term supplies at just $4 a gigajoule, less than half current levels, the Woodside boss said all players in the debate needed to be realistic. “It can’t get any lower than at the moment,” chief executive Peter Coleman said when asked about pressure to cut prices.
“I’m afraid if companies aren’t doing particularly well out of the current energy malaise, then they have other fundamental problems. We can’t get any lower.”
Heavy industry including chemicals producer Dow, fertiliser and explosives maker Incitec Pivot and Qenos have all raised concerns in the last year over their ability to remain competitive with energy costs on the east coast remaining stubbornly high.
Stimulating manufacturing and developing more fabrication in the oil and gas industry locally rather than importing materials would have to involve bold moves by the federal government, Mr Coleman said in an interview with industry body Appea.
“Government is going to need to support that in some way whether that’s through payroll tax relief, they are going to have to think more holistically about it,” Mr Coleman said. “Those conversations are on the table now with the government because they realise that out of COVID-19 the existing tax system and the way the government receives revenue is just simply not going to deliver the amount of revenue they need to be able to provide the service that people expect.”
“So we’re going to have to have a major change here and let’s hope along the way we’re able to bring some manufacturing and fabrication back to Australia.”
The worst oil price crash in a generation has stunted growth projects for all Australia’s big energy producers including Woodside, which was forced to defer $53bn of LNG developments after crude shed 70 per cent of its value in the last few months.
Prices have climbed back to $US36 a barrel after touching just $US14 a barrel in April, although Woodside said it did not expect a quick economic recovery.
“This is going to be sticky. It’s not likely to be a V-shaped recovery. We won’t be able to close our eyes and open them and wipe our brow and say that was a close one,” Mr Coleman said. “It’s going to last well into next year and possibly 2022 and that’s going to have a significant impact on cashflow.”