Current Gov’t Self-Sabotaging Our Status as a Trusted Exporter

The Editorial Board of the Australian writes, Japan’s biggest energy company, INPEX, has issued a timely warning on the likely financial and political cost of rushing too quickly to stop gas developments in the name of tackling climate change.

Inpex is Japan’s biggest oil and gas producer. It has invested $60bn developing the Ichthys LNG project off the Top End coast. Inpex CEO Takayuki Ueda has raised the alarm that sovereign risk is rising quickly in Australia and that the nation faces being left behind in its desire to be a global energy superpower in a changing world.

Ueda has taken direct aim at the policies of the current Australian gov't that are making investment decisions more difficult. He says stable and predictable policy settings are the key to attracting foreign investment in major energy infrastructure projects but the investment climate in Australia is deteriorating.

The warning from Japan is that satisfying domestic demand by restricting LNG exports via the Australian Domestic Gas Security Mechanism will damage the nation's hard-earned international reputation and should be avoided at all costs. Limiting gas supplies will only lead to increased global CO2 emissions as coal is substituted for gas.

On the geopolitical front, Ueda says Australia’s “quiet quitting” of the LNG business has potentially sinister consequences. And its dithering will only enrich shared strategic rivals, Russia, China and Iran.
These are hard facts that must be absorbed. The Australian government has stared down demands by the Greens to ban future coal and gas developments. It has told Japan that Australia will remain a dependable partner.
But the government is attempting to walk both sides of the street on energy security and future development. Future gas projects will face a high test before being allowed to proceed. They must demonstrate that they will not add to CO2 emissions from development and production.

To satisfy these conditions, perfecting technologies including carbon capture and storage will be vital. Nothing is guaranteed. Meanwhile, green activists are regrouping. New projects can expect to face protracted legal challenges.