Australia’s oil and gas industry has defended its contribution to the economy, saying it will deliver $13 billion a year in taxes by the end of the decade.
A day after the nation’s peak manufacturing group attacked it for hoarding valuable domestic gas supplies to export overseas at higher prices, the petroleum industry hit back.
The Australian Petroleum Production and Exploration Association’s (APPEA) chairman and boss at producer Santos, David Knox, lauded the industry’s contribution at its annual conference in Brisbane.
The industry already paid $8 billion in corporate taxes and royalties, he said, and by 2020 that would increase to $13 billion, more than two thirds of the forecast federal budget deficit.
“At a time when government revenues are under pressure, this is good news for all Australians,” he told the APPEA conference.
Manufacturing Australia’s chairman Sue Morphet said on the weekend that the tripling of gas exports to 63 million tonnes by 2017 would lead to gas shortages and a doubling in price, potentially killing many manufacturing companies.
However Mr Knox rejected her call to reserve up to five per cent of gas supplies for domestic use and to have a national interest export test because not enough new supply was coming online.
“Talk of reserving Australia’s gas for domestic use will keep it in the ground,” Mr Knox said.
“Talk of slowing the industry will slow economic growth.”
While the industry was opposed by some on environmental grounds, Australians needed it to succeed because it was fundamental to the functioning of a competitive economy that depended on reliable, affordable energy, he said.
Of the 12 global LNG projects being built, seven were Australian as the nation sought to tap into Asia’s growing energy market.
If all planned and proposed projects went ahead, the sector would account for nearly two thirds of investment up to 2020 across all industries, far bigger than mining.
However, the cost of building new LNG projects in Australia was 20-30 per cent higher than rival projects in the US, Canada and Mozambique, requiring lower local tax and regulatory costs, he said.