Santos warns ‘hot air’ inflating gas debate
Santos chief Kevin Gallagher will take a tough line when he meets Malcolm Turnbull today.
Santos chief executive Kevin Gallagher will take a tough line when he meets Malcolm Turnbull today, declaring the notion of “net contributor” of LNG a “false construct” encouraged by competitors.
Ahead of a meeting with the Prime Minister and Australia’s leading LNG producers to discuss Australia’s gas crisis, Mr Gallagher told the Sky Business Ticky program that suggestions of government interference, such as a gas reservation, would risk picking “winners and losers” in the market.
“If government decides to intervene because as an industry we are unable to sort this problem, any intervention has to be equitable across all projects,” he said. “In most cases where there is any form of reservation it would be tied to export capacity or sanction capacity. I don’t believe it is the role of government to pick winners and losers ... especially in my case with an Australian company.”
Bill Shorten yesterday demanded more gas be made available on the domestic market, saying it was “literally crazy” that Japanese and Korean businesses could buy Australian gas cheaper than Australian companies.
“We call upon the Turnbull government to bring these companies together, but not leave it to them to fix,” the Opposition Leader said.
“Malcolm Turnbull’s got one job tomorrow: it’s to bang heads and get all the businesses who are producing the gas to prioritise Australian jobs and Australian business before they export gas we need here overseas.”
Mr Shorten demanded the government intervene in getting more Australian gas on the domestic market.
After recent meetings with Mr Turnbull, the other two big players in the east coast export market, Shell’s QCLNG and Origin’s APLNG, have committed to boosting supply to the Australian market and agreed to become net domestic gas contributors.
Mr Gallagher reiterated that nationally Santos was a “net contributor” to the Australian market, but said the undertaking by its partners was a “false concept” perpetrated to get a competitive advantage.
“It’s a fake construct designed around how much they buy and sell from the market. The misconception is that the companies own the gas. The companies don’t own the gas. We’re given the rights to develop the gas ... the gas is owned by the Australian public. All these projects were sanctioned on an export capacity basis. That has not changed.
“None of the LNG projects are net contributors. They all export the vast majority of the gas, if not all that goes through the facilities. It’s all exported through LNG.
“I would describe this concept of net contributor as a fake construct designed to put pressure on the operating model of the GLNG project.”
Mr Gallagher said he was open to facilitating gas swaps in the international market, but said the real issue was supply because of lack of development.
“Any gas we can free up we’re happy to sell into the domestic market. We don’t have any spare gas. We are already producing below what we planned to produce as GLNG. Today Santos has very little gas available as a result of not being able to develop projects in our pipeline,” he said.
Mr Gallagher pointed to the failure of the Narrabri project in limiting Australia’s domestic gas supply. “If Narrabri had been developed as we all anticipated it would be back in 2010-11 as it should have been we wouldn’t have a gas shortage today.
“It has to be across the board. There is plenty of gas in the east coast and the Northern Territory it is just a question of being able to develop it.”
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