Coronavirus: energy industry wants reform, clarity

Australia’s oil and gas industry will deliver a five-year blueprint to Scott Morrison, calling for tax, environmental and regulatory reforms.

Australian Petroleum Production and Exploration Association chief executive Andrew McConville says the government must “get out of the way” of the market and provide clear investment certainty. Picture: Ross Swanborough

Australia’s oil and gas industry will deliver a five-year blueprint to Scott Morrison this week, calling on the federal government to ­deliver major tax, environmental and regulatory reforms and back the unlocking of investment and exploration across the gas sector.

With the government preparing to endorse a gas-led COVID-19 recovery in the October budget to create new jobs and manufacturing opportunities, the Australian Petroleum Production and Exploration Association has warned against “picking winners”.

Association chief executive Andrew McConville cautioned against the distraction of a gas-led recovery and said the government must “get out of the way” of the market and provide clear investment certainty.

“It’s about looking at the fundamental things that make the market work,” he told The Australian. “Promote investment, get the stuff out of the ground, get the ­environmental and regulatory frameworks right and don’t spook the market with talk of reservation and price caps.”

Minister for Energy Angus Taylor at a press conference before drilling began for Snowy 2.0 at Lobs Hole, near Mount Selwyn in the Snowy Mountains on June 30. Picture: AAP

APPEA’s Powering Australia’s Recovery blueprint, which will be released on Monday, provides a list of actions for the Morrison government to adopt that the gas lobby group says will get the ­national economy back on track.

They include the federal government not imposing a national domestic gas reservation policy, making no changes to the Australian Domestic Gas Security Mechanism until it ceases in 2023 and working with states to lift bans and moratoriums on gas projects.

It also calls for significant amendments to the Environment Protection and Biodiversity Conservation Act, including removal of the water trigger, and improving “inconsistent” gas market regulatory frameworks. Its report said global demand for natural gas was forecast to “continuously ­increase to beyond 2040”.

“Australia has an opportunity to capture the next wave of investment which could deliver more than $50bn of capital expenditure. There is an estimated $80bn of taxation receipts available over the life of new projects but only if Australia can attract and secure scarce capital,” the report said.

National COVID-19 Commission special adviser Andrew ­Liveris. Picture: Lyndon Mechielsen

Mr McConville said a “comprehensive approach” was needed to set out long-term action around environmental and regulatory reform, exploration and emissions.

“Our message to government is that you can’t just pull one lever and expect to pull the genie out of the bottle. You’ve actually got to take a fairly comprehensive, systematic approach to it. If you do that you’re going to get the investment that’s going to come.” Mr McConville said there was no ­“silver bullet” and warned against penalising the gas sector to prop up the manufacturing industry, which was undergoing “structural adjustment”.

“The reality is if you get supply at one end and demand on the other, the infrastructure will be built, the pipelines will be built, the capacity will be there.”

National COVID-19 Commission special adviser Andrew ­Liveris, former chair of the Dow Chemical Company, delivered the government a report earlier this year that heavily focused on the need to drive Australia’s economy out of the pandemic through a gas-led recovery.

Industry Minister Karen ­Andrews’s manufacturing strategy, expected before the budget, will complement work being done by Energy Minister Angus Taylor on how to better harness our vast gas supplies to support cheaper and more reliable energy.

As revealed by The Australian last month, APPEA is also pushing the Morrison government to amend the $1.4bn-a-year petroleum resource rent tax to unlock gas supplies for the east coast market and investment across the sector. Treasury has been considering long-term changes to the PRRT, introduced in the 1980s.