While high oil prices had created a perception of a booming industry, Australia now had a deficit in liquid petroleum production and there was a need for industry and government to work together to address this issue.
“Oil production is declining and although LNG is growing, this is not to the extent necessary to bridge the gap,” Robinson said.
“These are not just industry interest issues, they are of crucial national interest.”
APPEA and Australian Industry and Resources Minister Ian Macfarlane had developed a strategy to make Australia a more attractive destination for capital investment in exploration and production, including exploration of high-risk frontier areas, Robinson said.
APPEA president Reg Nelson also emphasised the need for more exploration.
“We need a lot of successful exploration,” Nelson said.
“With quality seismic data, highly skilled analysis and a dose of good luck, we will find more oil and gas in this country. But without exploration we will find nothing.
“We can embark on a pro-active and successful partnership between industry and government to the benefit of all. The alternative is to constrain the industry’s ability to make the maximum contribution possible to Australia’s indigenous petroleum production, energy security and economic welfare with policy settings that are not appropriate for the times ahead.”
But there was a risk that growing resentment over high petrol prices and assumptions that the petroleum industry was guilty of price-gouging and profiteering could prompt politicians into counterproductive actions, she said.
“It is difficult to overstate the potential negative impact on our industry of community resentment over high petrol prices and oil and gas industry profits,” she said.
“The last thing Australia needs is for this hostility to be translated into heavy-handed government intervention driven by political expedience, ignorance and resentment. Such action can only end in substantial consumer pain, fuel shortages and longer term price spirals.”
There were already signs that governments were considering such actions, she said.
Recently, the Western Australian Government released a discussion paper, which canvassed a proposal that would involve a mandatory requirement for LNG producers to reserve a percentage of the gas for domestic purposes.
APPEA did not believe that mandating gas reservation would help secure long-term supplies of cheap gas for WA consumers, according to Robinson.
“It crushes rather than encourages competition,” she said.
“It will definitely lead to fewer rather than more gas suppliers. It would discourage investment by non-LNG players and could affect Australia’s reputation as a reliable supplier of LNG.”
This approach would inevitably lead to higher than necessary prices in the long term and potential shortages, Robinson argued.
“I believe there would be great merit in establishing a small government-industry working group to explore different scenarios and options that grow the domestic gas industry, increase competition, and encourage greater exploration and production,” she said.
APPEA 2006 Conference news is proudly brought to you by
