Exxon slams government gas ploys

Energy major ExxonMobil has savaged the prospect of government intervention in the east coast gas market.

ExxonMobil wants the government to butt out of the gas market

Energy major ExxonMobil has savaged the prospect of government intervention in the east coast gas market, arguing both domestic reservation and a government-underwritten transcontinental pipeline could see planned investments culled due to artificial market conditions.

A COVID commission taskforce has recommended the Morrison government guarantee gas volumes, open new fields and build pipelines to halve the price of the fossil fuel to a $4 a gigajoule target.

Exxon, which is selling its 50 per cent stake in the ageing Bass Strait gas fields, said the National COVID-19 Coordination Commission needed to find the right balance between pursuing a gas-led recovery out of the pandemic without distorting the market.

“As an industry we have historically argued for many of the recommendations being made by the NCCC in order to support a strong energy sector, such as removing moratoriums on gas exploration and development, reducing red and green tape and attracting direct foreign investment,” ExxonMobil Australian chairman Nathan Fay will tell the Annual Credit Suisse Australian Energy Conference on Tuesday.

“However, other ideas such as a gas reservation scheme for the east coast or a government-subsidised transcontinental pipeline have the potential to create artificial market conditions and uncertainty for producers, significantly risking a whole host of future investment options including LNG import projects.”

Government intervention would send the wrong signal while $4 gas was not a realistic target, Exxon said.

The “days of $4GJ gas are unfortunately behind us and pushing for government intervention to achieve lower prices is unlikely to be sustainable in the long term,” Mr Fay will tell the conference.

“As a local manufacturer ourselves at the Altona refinery, we understand the impact higher energy prices can have on a business. However, history has shown us that government intervention into the oil and gas market more often than not leads to higher prices, by discouraging investment.”

A push for domestic reservation was also not the best way to ensure more gas flows to users in the eastern states, Mr Fay will say, noting Victoria’s recent lifting of a gas drilling moratorium included the caveat that reasonable efforts must be made to provide gas to the domestic market.

Mr Fay will say the ACCC found government reservation policies would reduce new sources of gas being developed.