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Woodside urges fiscal stability at AGM

Image shows LNG export vessel

Photo by Bloomberg

28th April 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Oil and gas major Woodside has warned that fiscal uncertainty in Australia could prevent the company from making further investments.

Speaking at the company’s annual general meeting, chairperson Richard Goyder said on Friday that Woodside was only able to invest the $12-billion for the Scarborough and Pluto Train 2 projects, in Western Australia, because of the stable fiscal regime.

“We were only able to make the decision to invest in Scarborough and Pluto Train 2 because of the fiscal and regulatory certainty that Australia has always offered in the past. We will only be able to make future decisions to invest in both significant new gas projects and the new energies such as ammonia and hydrogen that will power our future if that fiscal and regulatory certainty is maintained.

“Otherwise, we expose our shareholders’ capital to unacceptable risk,” Goyder said.

His comments come as the federal government considers a review of the Petroleum Resources Rent Tax (PRRT), with Treasurer Jim Chalmers saying the advice contained within the report was the culmination of work done over the life of two governments, as well as substantial consultation and engagement over a long period of time.

This was followed by independent costings for the Greens, which according to The Guardian, could net nearly A$94.5-billion for the federal budget over a decade.

The PRRT is a tax generally on profits generated from the sale of marketable petroleum commodities, and since 2019 onshore petroleum projects have been removed from the scope of the tax.

The federal government this week also released the Gas Code for final consultation, which established an anchor to the gas price through the combination of a price cap, which is to be set at $12/GJ and subject to a review commencing by 1 July 2025, and a process for qualifying for exemptions from the price cap on the basis of making satisfactory Australian Competition and Consumer Commission and court enforceable supply commitments.

The Gas Code will also allow small producers of gas to be exempt from the price cap if they supply only the domestic market.

In addition, it will require all participants to abide by conduct provisions that will level the negotiating playing field between users and producers to deliver a better functioning gas market.

Woodside’s Scarborough and Pluto Train 2 projects are due for first liquefied natural gas (LNG) cargo in 2026, and combined, the projects are now 30% complete.

Woodside CEO Meg O’Neill told shareholders that in addition to providing gas to the local markets, the two projects would also create thousands of jobs locally and would deliver significant revenue to state and federal governments.

Meanwhile, O’Neill noted that Woodside was also expecting first oil at the Sangomar project, offshore Senegal, later this year, and was targeting final investment decision- (FID-) readiness for its Trion oil project, offshore Mexico, and its H2OK hydrogen project, in Oklahoma, for 2023.

“Also this year, we are targeting an FID at our Woodside solar project in the Pilbara, which could make an important contribution to our plans to decarbonise the Pluto LNG operations. This facility could supply 100 MW of solar energy to Pluto LNG and other customers located near Karratha, with potential expansion to a maximum of 500 MW,” she added.

Edited by Creamer Media Reporter

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