PERTH (miningweekly.com) – Oil and gas producers on Monday welcomed the federal government’s recent move to scrap a number of duplicative regulations, but noted that more could be done around labour agreements.

Woodside chairperson Michael Chaney said at the Australian Petroleum Production and Exploration Association (Appea) conference, in Perth, that government had an important role to play in ensuring that Australia remained a reliable supplier of liquefied natural gas (LNG) to the market.

“Australia is a country that operates under rigorous, world-class safety and environmental standards. But any opportunities to lessen unnecessary burden or overlap should be embraced to enhance our industry’s reputation as a reliable supplier,” Chaney said.

He added that the industry was looking forward to the federal government delivering on its promise to reduce the regulatory burden for business by establishing and meeting a red and green tape reduction target of A$1-billion per year.

“I welcome the Prime Minister’s promise to set aside two Parliamentary sitting days a year for the express purpose of repealing counterproductive, unnecessary or redundant legislation,” he said.

Chaney noted that there was currently a significant compliance cost and regulatory burden on the Australian LNG industry, with the costs for drilling an exploration well increasing from less than A$100 000 in 2011, to between A$400 000 and A$750 000 today.

“So, I welcome the government’s commitment to streamlining environmental approval processes under the Environment Protection and Biodiversity Conservation Act.

“The proposed ‘one-stop-shop’ will facilitate objective-based, efficient regulation of environmental management and we look forward to continued industry engagement and guidance to assist in understanding the new requirements.”

However, Chaney noted that the most important focus for the government’s should be ensuring a reliable industry through workforce planning and workplace relation policies.

“When it comes to Australia’s current workplace relations legislation, there are serious shortcomings. Our high wage structure is not matched by sufficiently high productivity, something I firmly believe is hindered by the so-called Fair Work Act.”

US energy major Chevron warned that rising labour costs were hampering the competitiveness of the Australian oil and gas industry, and combined with low productivity, would ultimately cost jobs.

“This wage growth is what is currently crippling Australian industry and is simply not sustainable,” Chevron Australia MD Roy Krzywosinksi told delegates.

Krzywosinksi proposed that labour agreements should reflect a more competitive market-based structure.

“It’s not much good having the best paying jobs in the world, if there’s fewer of them because the pipeline isn’t replenished,” he said on Monday.

Another reform suggested was a move away from the short-term nature of project agreements, with Krzywosinksi saying that current labour agreements did not cover the construction life of LNG projects, resulting in a lack of certainty around labour costs.

“To reach a price that’s mutually beneficial in today’s environment, we need to get costs down – or risk investments going offshore. Projects won't go ahead without agreement on rational pricing mechanisms to underpin these projects. If we collaborate, I am confident we can find common ground to achieve the necessary pricing to underpin future projects while supporting Asia’s economic expansion and development,” Krzywosinksi said.