orica tells gas users stop whinging

Orica chairman Russell Caplan tells gas users to stop seeking assistance

MATT CHAMBERS |
The Australian |
February 03, 2014 12:00AM



THE new chairman of explosives maker Orica has separated himself from big gas users who are calling for government intervention as a looming east coast shortage threatens to drive prices higher, saying gas buyers need to look after themselves, not bleat for assistance.

Russell Caplan, the former Shell executive who took the helm of the Orica board after last week's annual meeting, will not be joining Dow Chemical chief Andrew Liveris and Incitec Pivot chief James Fazzino in calling for governments to provide relief from rising east coast gas prices.

"I like the notion of self-help -- I don't have much sympathy for large firms who bleat about government assistance," Mr Caplan told The Australian, after being elected chairman on Thursday. "At the end of the day, gas producers will want to sell gas at world prices.

"I think that tide is irreversible and shouldn't be reversed, because companies need to get out and look after themselves."

The $70 billion of LNG export plants being built at Gladstone in Queensland are set to increase demand in Australia's pipeline-connected eastern states fourfold over about three years and make local gas users compete with Asian buyers.

Concerns that the projects will be short of coal-seam gas in their early years have already made east coast gas hard to find.

Orica, under chief executive Ian Smith, has done a recent deal with ExxonMobil to buy 14 petajoules, or about 2 per cent of eastern Australian demand, of gas from Bass Strait at what appear to be lower prices than many sellers are quoting.

Mr Smith has also locked in the option of buying cheap gas from junior Cooper Basin explorer Strike Energy by agreeing to finance early drilling.

"Ian has done exactly the right thing -- to go and help himself by doing deals," Mr Caplin said. "Whether it's the Esso (Exxon) deal or the Strike deal, it's all about going out and helping yourself."

http://www.theaustralian.com.au/business/mining-energy/orica-chairman-russell-caplan-tells-gas-users-to-stop-seeking-assistance/story-e6frg9df-1226816189322