Nolan told a Committee for Economic Development of Australia (CEDA) luncheon that technology had made the international gas market more competitive, creating both opportunities and threats for the Australian LNG industry.
Technology had lowered production costs of LNG, making it economically viable to ship it around the world. This new global market could boost prices and opportunities for Australia, but it also helped new competitors from the Middle East wanting to sell into Asian markets.
Nolan said tax relief on offshore gas production was needed to encourage the industry and help it compete internationally.
Australia’s offshore Petroleum Resource Rent Tax meant that gas was taxed 10 times more than brown coal. Exxon Mobil wanted the federal Government to pay gas-fired power generators a tax rebate to bring gas power more into line with brown coal.
"We are going to push it very hard but it is up to the Government," Nolan said.
He also called for urgent federal government action to address the shortage of skilled workers required by the LNG industry. The Gorgon project alone needed about 3000 workers, according to Nolan.
"Appropriate action by the federal government to address these skill shortages through technical training and immigration of skilled overseas workers, will be essential to try to meet this demand," he said.
The Australian LNG industry would also have to enhance its productivity or risk being undercut by overseas competitors, according to Nolan.
"We are very supportive of the federal government trying to make the industrial relations system more efficient," he said.
ExxonMobil recently forecast that global LNG production would surge from 150 million tonnes a year to 450 million tonnes a year by 2020 to meet demand. It predicts growth in total energy consumption forecast will jump by 50% by 2030, with China and India accounting for much of this demand.
Nolan said hydrocarbons will continue to provide the bulk of energy needs and by 2030 renewable energy would still provide less than one per cent of Australia’s energy output.
ExxonMobil recognised that greenhouse gas emissions were a serious problem but favoured technological solutions, according to Nolan. In Australia the most effective way to reduce greenhouse gas emissions would be to shift electricity generation from coal to gas, which had lower emissions, he said.
Nolan also said ExxonMobil would stick to its commitment to the South Australian Government to re-evaluate the future of the mothballed Port Stanvac refinery in Adelaide in 2006.
The company would not bring forward this reassessment despite improved oil refining margins.
"Although the margins have been good since we closed it, we continue to question whether it is a long-term business," Nolan told the CEDA meeting.
Port Stanvac was put on ‘care and maintenance’ in 2003 in the face of import competition from larger Asian refineries.
