Australia’s ‘investment climate deteriorating’, says Japanese gas giant

The head Japanese gas giant Inpex has warned the ‘investment climate in Australia appears to be deteriorating’.

Takayuki Ueda says ‘Australia may be a lucky country but needs to recognise it is in a global competition’. Picture: Damian Shaw

Takayuki Ueda, chief executive of Japanese gas giant Inpex, has warned that Anthony Albanese’s sweeping energy market interventions will “choke investment, strangle expansion of LNG projects and allow Russia, China and Iran to fill the void”.

Mr Ueda and Japanese ambassador Shingo Yamagami delivered stinging rebukes of the Albanese government’s energy and gas policies at a closed-door lunch in Parliament House on Thursday, attended by Resources Minister Madeleine King and Trade Minister Don Farrell.

Amid rising concerns in Japan and other key energy partners over Labor’s targeting of gas and coal, Mr Ueda said Australia’s energy policy environment “appears to be driven almost by ideology and domestic concerns”.

The Inpex president, whose company has operated in Australia since 1986 and pumped $60bn into the Ichthys LNG project off WA and Northern Territory, said Australia’s “quiet quitting of the LNG business has potentially very sinister consequences”.

Japanese ambassador Shingo Yamagami.

“Australia may be a lucky country but needs to recognise it is in a global competition. The race has started, and Australia already lags far behind. Certainty in policy direction and a stable regulatory framework will continue to encourage strong investment in Australia,” Mr Ueda said.

“Unfortunately, the investment climate in Australia appears to be deteriorating. In Japan we say, ‘don’t cheat at rock, paper, scissors’. This translates to ‘don’t move the goalposts after the game has started’.

“The question of who will ­replace Australian supply into the market is front and centre. Alarmingly, the ‘inconvenient truth’ is most likely that Russia, China and Iran fill the void.”

Mr Yamagami, who will return to Japan in coming weeks following 2½ years in Canberra, said the “neon lights of Tokyo” would go out if Australia stopped exporting energy resources, and warned against rushing the net-zero emissions transition.

Speaking to ministers, MPs and business leaders, Mr Yamagami – a fierce critic of the Queensland Labor government’s hike on coal royalties – said Australian resources played an integral role in helping to “keep Japanese homes warm”.

“You only have to look at the vibrant streets of Japan’s never-sleeping capital. It’s hard to imagine the neon lights of Tokyo ever going out, but with Australia now supplying 70 per cent of coal, 60 per cent of iron ore, and 40 per cent of Japan’s gas imports, this is exactly what would happen if Australia stopped producing energy resources,” he said.

The intervention by Mr Ueda and Mr Yamagami came 24 hours after the Prime Minister said “I have no concerns about our relationship with Japan” in response to concerns raised about the safeguard mechanism putting coal companies at risk of competitive disadvantage. “We are a secure and reliable partner. We are a partner for Japan, South Korea and other nations that always delivers on the commitments that we make,” Mr Albanese said.

The government has also moved to allay concerns from Australian gas producers that the safeguard mechanism emissions scheme could stifle investment in new gas fields, potentially putting energy prices and projects at risk.

Mr Ueda invoked Mr Albanese’s meeting with Japanese Prime Minister Fumio Kishida in Perth last year where they “reaffirmed the critical importance of enhancing energy security co-operation, including through secure and reliable energy resources trade and investment, such as LNG”. He said Labor’s opposition to carbon capture and storage technology threatened Australia’s 2050 net-zero target and put new gas projects linked to LNG facilities at risk under the tougher safeguard mechanism.

Mr Ueda said Inpex was “encouraged” by recent comments by Mr Albanese and Ms King about the “key role gas will play in the world’s transition to clean energy, while guaranteeing energy security for both Australia and for our partners in the region”.

Mr Yamagami said he was “confident” Australia would remain a trusted and stable energy exporter but called for pragmatism in the process towards decarbonisation.

Senator Farrell brushed off the warnings and said the government’s policies would have “zero impact on our relations” with Japan. “It won’t have any impact on our international reputation or our reliability or stability as a supplier of, among other things, gas. We’re a democracy, just like Japan. And companies in Japan can express points of view that don’t always agree with the government of the day,” he said.

Opposition foreign affairs spokesman Simon Birmingham said it was “astounding” that Senator Farrell had sought to “sweep it away and suggest there was no consequence to these remarks”.

“This is the biggest recent investor into Australia and they are saying there is real consequence. And so Don Farrell, Anthony Albanese and this entire Labor government really should heed the message and take the wake-up call delivered,” Senator Birmingham said.

After new Australian Domestic Gas Security Mechanism reforms came into force on Thursday, Ms King said “Australia will always remain a reliable supplier of energy to Japan and a safe destination for foreign investment”.

Australian Petroleum Production and Exploration Association chief executive Samantha McCulloch said the government must “heed the mounting ­concerns coming from our valued friend and focus on promoting ­investment in new Australian gas supply”.