Labor’s gas intervention has ‘damaged’ Australia, says ConocoPhillips CEO Ryan Lance

Australia’s reputation as a secure investment location and stable supplier of energy has been hurt by the government’s intervention policy, the CEO of energy giant ConocoPhillips says.

A cargo of LNG leaves Gladstone Harbour.

The federal Labor government’s intervention into the gas market has damaged Australia’s reputation as a secure investment location and stable supplier of energy, says ConocoPhillips chief executive Ryan Lance.

The comments underscore frustration from global energy companies about Labor’s attitude towards gas, which threatens to deter investment that they say will intensify a domestic market shortfall expected as soon as next year.

Labor strained ties with domestic and foreign gas companies last year when it surprised many in the industry with a mandatory code of conduct, the centrepiece of which included a cap of $12 per gigajoule on new supplies, though with caveats.

Labor insisted it was forced to act after domestic prices surged to record highs, leaving households and businesses struggling to stay afloat – but Mr Lance said the impact had been substantial.

“Some of the regulations and the price controls have hurt Australia’s reputation in the marketplace. It has created some uncertainty and that’s a problem that Australia is going to have to deal with,” he told The Australian.

Australia is one of the world’s largest LNG exporters, supplying seemingly insatiable demand from Asia, but the industry insists it does not feel appreciated by the federal government and some of its state counterparts.

ConocoPhillips chief executive Ryan Lance.

While a major employer and substantial source of taxes, the LNG industry also finds itself in the crosshairs of some who argue export shipments should be curtailed to mitigate a looming east coast domestic shortfall.

Mr Lance said such rhetoric had stoked alarm inside ConocoPhillips.

“If you had asked me five years ago, would I ever worry about this conversation in Australia? I would have said no. It is quite surprising to hear those kinds of words.

“The most important thing is that people need to understand that the best way for a strong domestic market is a strong export market. They go hand-in-hand, you cannot have one without the other,” Mr Lance said.

“Our APLNG project is the largest supplier to the east coast and we recognise the need to satisfy the domestic market, but the only reason that came about was because the export market became available to us.”

But with a looming shortfall that appears almost inevitable bar perhaps an LNG import terminal, the likes of the Victorian state government have moved to point the finger of blame at Australia’s LNG industry.

In a thinly veiled rebuke of such suggestions, Mr Lance said the supply picture was a natural consequence.

“We have tried to communicate with people that for every action there is a reaction,” he said. “You’re sowing the seeds of the next moment of volatility and higher costs if you do things today that make supply harder to get out of the ground.”

Mr Lance is the latest to warn authorities from meddling in the country’s export market.

Santos chief executive Kevin Gallagher earlier this year said Australia would destabilise the Asia Pacific region by curtailing LNG supplies and risk increasing global reliance on unstable, undemocratic jurisdictions.

But Australia faces a looming crisis. The Australian Energy Market Operator earlier this year warned that the country’s east coast could run so low on gas that generators may have to turn to diesel to safeguard electricity supplies during some periods next winter, and the shortfall would be substantial by 2028.

Notable projects that could help the supply outlook remain on ice as they muddle through the regulatory landscape.

ConocoPhillips is considering drilling in the Otway Basin, but Mr Lance said it was too soon to determine whether the projects would proceed.