Speech at the Asia Pacific Oil and Gas Conference, Adelaide
Thank you to MC, Lisa Dallow, for that introduction.
I begin by acknowledging that we are meeting on the traditional Country of the Kaurna people of the Adelaide Plains and I pay my respect to elders past and present.
I recognise and respect their cultural heritage, beliefs and relationship with the land.
I acknowledge that they are of continuing importance to the Kaurna people living today.
I also extend that respect to other First Nations people present.
Thank you for this opportunity.
Before I start, I’d like to acknowledge:
- The Hon Tom Koutsantonis, Minister for Energy and Mining, Government of South Australia
- Paul Blakeley, Chief Executive Officer, Jadestone Energy
- Kamel Ben-Naceur, 2022 SPE President, Nomadia Energy Consulting, and
- David Banks, APOGCE 2022 Conference Chair and Chief Operating Officer, Santos Ltd.
I like to think that Western Australians and South Australians share a similar world view on many matters.
We both have two AFL teams – though obviously the port-based teams are superior. South Australia and WA share a border. Both Adelaide and Perth have different time zones to Melbourne and Sydney.
We both had the wisdom to elect Labor premiers.
Our two states were the first to give women the right to vote.
And we share a similar mind set when it comes to the resources industry. We both understand how vital our resources are to our nation and to our standard of living.
And increasingly we understand the importance of our resources sector in reaching net zero.
Australia’s large offshore gas resources generate valuable export earnings and provide highly skilled jobs.
Australia’s LNG export earnings are forecast to rise from an estimated $70 billion in 2021–22 to $90 billion in 2022– 23, driven by rising global energy prices.
This provided an incentive for many LNG facilities to operate at or above capacity for the last 12 months.
Importantly, there was an increase in Petroleum Resource Rent Tax Revenue from $897 million in 2020-21 to $2.17 billion in 2021-22.
Australia will continue to support the needs of local industry and local communities as well as support the growth in global gas demand among our important regional neighbours.
This demand is predominantly driven by Asian economies and the role of LNG as a reliable and flexible fuel in a decarbonising world.
We cannot ignore the immense pressure the illegal and abhorrent invasion by Russia of Ukraine is placing on global gas supplies.
And this supply crunch is not limited to Europe. We feel the ripples of this conflict in the energy supplies to our good friends in Japan; and Australia’s role in ensuring the energy security of Japan and other regional neighbours is something this government takes very seriously.
Inevitably, these ripples end up on our shores too, as we see in increased domestic gas prices which are placing enormous input cost pressures on local manufacturing. Ensuring local industry and manufacturers, as well as households, have access to affordable gas while also meeting our significant international obligations is a priority for this government.
It is without doubt a complex and challenging problem made more difficult by international events. Energy markets around the world are facing the same - and if not worse - pressures. I will continue to work with my cabinet colleagues and the industry to seek to find long term sustainable solutions to this upheaval in our local gas markets.
Australia’s large upcoming offshore developments, including the Scarborough, Dorado, Crux and Browse projects, represent an investment of over $50 billion.
Developing large offshore gas resources will ensure that the Australian LNG industry can maintain production.
In doing so, it will remain globally competitive and continue to generate valuable export earnings for Australia.
Our commitment to the sector is steadfast.
Our position is that oil and gas projects can proceed if proponents are able to fund them and they pass the required environmental approvals, including on emissions.
While it’s central to powering a strong economy, we are also cognisant of the sector’s role in the transition to net zero.
As you know, we are committed to achieving net zero while sustaining the economies and livelihoods of our key regions.
The resources sector will drive the net zero transition.
While there is a lot of work to be done to ensure the sector reduces its emissions, one has to acknowledge the efforts that are already taking place in this area.
The sector is working hard to assist Australia in meeting its goals by shipping carbon-neutral LNG, reducing its own emissions and leading the way to deploy Carbon Capture and Storage technologies.
It’s a challenge, but there are also enormous opportunities.
To achieve net zero globally, low emissions technologies will need to be adopted across all sectors of the economy – here and abroad.
And herein lies the chance for us to capitalise.
Critical minerals, of which we have many, will be the foundation for most, if not all, of these low emissions technologies.
Our challenge is to scale-up the supply of the minerals the world needs to make these technologies.
That’s where the world-leading experience and expertise of Australia’s resource sector will play a leading role.
The government also understands the contribution that traditional resource industries have played and continue to play.
There cannot be a clean energy transition without these traditional resources continuing to play a part.
Fossil fuels will continue to balance our energy mix and ensure flexible and dispatchable generation.
Gas is central to supporting Australia’s electricity grid.
It is less emissions intensive than other fossil fuels and can be used to boost the reliability of an electricity grid increasingly powered by renewables.
Natural gas will be a critical fuel in the decarbonisation of Australia’s economy.
Gas provides a reliable, cost-effective energy source for peak winter heating, seasonal storage and high temperature heat for industry.
It can also ensure long term energy security for Australian households and industry as well as our core trading partners.
Australian LNG will have a key role to support the decarbonisation ambitions of our trading partners, particularly in north Asia.
Our north Asian trading partners invest in our gas fields to help them navigate away from coal power generation, through gas and eventually to hydrogen and other cleaner energy sources.
The International Energy Agency (IEA) reports that, from 2010 to 2018, global coal-to-gas switching has saved around 500 million tonnes of CO2.
That is equivalent to putting an extra 200 million EVs running on zero-carbon electricity on the road over the same period.
An Australian resources sector that is reducing emissions will be well placed to export ‘premium’ products that are low emission and environmentally responsible.
Australia is leading the way with carbon neutral liquefied natural gas cargoes being shipped from Australian LNG projects to our trading partners.
Carbon Capture, Utilisation and Storage – CCUS – presents an opportunity to decarbonise Australia’s energy exports, particular gas processing, LNG activities and potentially hydrogen.
At the same time, it can help us achieve our climate change mitigation objectives.
The International Energy Agency and the Intergovernmental Panel on Climate Change (IPCC) recognise CCUS as essential to reaching global net zero by 2050 targets.
Australia has a strong comparative advantage regionally and globally, when it comes to CCUS and is well placed to become a world leader in this emerging industry.
Australia has potentially over 20 billion tonnes of suitable geological CO2 storage capacity.
I look forward to welcoming new offshore CCS projects, as a result of greenhouse gas storage assessment permits recently awarded.
We also possess extensive experience and skills in the resource sector, which are directly transferable to low emissions technology.
When it comes to the reputation of the oil and gas sector, I believe we need to do a better job of communicating its importance to the Australian community.
All of us here today know how vital it is, but does the average person on the street take its role for granted?
Our minerals and oil and gas resources are used in Australia and around the world to make the everyday essentials we need for daily life.
They generate electricity, lighting, heating and cooling for our homes and offices.
Without them there wouldn’t be mobile phones in our pockets, solar panels on our roofs and batteries in our EVs.
So the challenge is to help everyday Australians who don’t have exposure to the industry to understand the role it has in their everyday lives.
There are also exciting careers ahead for the next generation of resources and oil and gas employees.
It is important to communicate the range of career opportunities on offer in a safe and inclusive sector.
In addressing labour shortages, there is more we can do in areas like attracting women into mining and resources.
The resources sector remains one of the most male-dominated industries in Australia.
Improving female representation in the industry – at all levels and across a range of roles – means a commitment to ensuring every worker in the sector is treated with respect in the workplace.
It is essential that we protect the safety of workers in the resources sector – both physical safety and their mental health.
ADGSM - Heads of Agreement
There are a number of other ways we can support the sector’s social licence.
First and foremost, we must ensure domestic gas supplies are met.
A shortfall of domestic gas would likely see Australians face higher prices, disruptions in supply and unplanned outages.
On 29 September 2022 I negotiated a new heads of agreement with the east coast LNG exporters.
Through the commitments made in the new HoA, we will ensure sufficient gas is supplied to the east coast market in 2023 to avoid a shortfall.
Having secured commitments, and agreed a new Heads of Agreement with Australia’s east coast LNG exporters, I made the decision not to commence the process to activate the ADGSM in 2023.
I am pleased we’ve been able to work with LNG exporters to avoid the shortfall, and prevent the need to activate the ADGSM.
But that said we need to be mindful of the impact high gas prices are having on manufacturers.
This Government is committed to doing more to support manufacturers and I expect gas companies to do their part too.
We need to continue to invest and promote exploration.
Without it, we risk depleting our domestic oil and gas project pipeline, which will impact both price and reliability of supply.
This also includes ensuring titleholders meet their decommissioning obligations in a safe and timely way.
And managing the associated risks and liabilities, during, and at the end of the project.
To this end, I am committed to pursuing all opportunities to strengthen the regime and make use of available regulatory tools.
This means continuing to work closely with all of you, and other key stakeholders, along the way.
Our resources industry, including the oil and gas sector, has played such an important role in Australia’s past and it is even more important for our present and our future.
There is no doubt the events of recent years have been challenging. The sector has remained strong and will continue to flourish.
The Government’s commitment to the sector will not waver – we’ll do what we can to continue to ensure projects that stack up economically and environmentally can prosper.
Thank you again for this opportunity and I look forward to catching up with all of you soon.