Australia’s great gas giveaway

How Australia gives gas to multinational corporations for free
by Mark Ogge, Rod Campbell and Piers Verstegan

According to the Australian Government’s Future Gas Strategy, gas is “critical” to the nation’s economy.

In view of this, many Australians might be surprised to learn that a large amount of the country’s gas reserves are essentially being given away for free.

Australia has ten facilities that export gas as liquified natural gas (LNG). Six of these projects—four of the five operating in Western Australia, along with both of the Northern Territory’s facilities—pay no royalties, either state or federal. These facilities represent 56% of Australia’s gas export capacity. This means that more than half the gas exported from Australia is given for free to the companies exporting it.

The monetary value of this gas is enormous. The total value of LNG exports over the last four years is estimated at $265 billion. Exports of LNG based on royalty-free gas were valued at a total of $149 billion. To put this another way: in the last four years alone, Australians have given away the gas that made $149 billion worth of LNG, for free. $111 billion worth of this royalty-free LNG was produced in Western Australia.

The billions of dollars in forgone revenue each year from effectively giving away Australian gas for free could be invested in a sovereign wealth fund (as it is in Norway) or used to raise productivity and increase living standards of Australians by funding schools, hospitals, renewable energy, and other needed public infrastructure.

The gas industry does not make a fair contribution to the community. The Australia Institute recommends:

  • A comprehensive inquiry into the mismanagement of Australia’s gas resources;
  • The application of a royalty to all gas produced in Australia.

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