Barnett blocks Browse

Capture

Those looking for a quick uptake of investment in floating LNG (FLNG) to help bridge the mining investment cliff will be frustrated by today’s news that the WA government is refusing to change its leases to allow offshore processing of the gas:

“They don’t expire till the end of next year so you may ask, ‘Why the rush?’ ” Mr Barnett said in an interview.

“We don’t intend relaxing them unless we have a new arrangement that is satisfactory to the state. The key condition is that the gas is developed for James Price Point.”

…The Browse Basin leases are located in state and federal waters.

The state government controls two out of the seven gas retention leases, arguably representing 20 per cent of the gas.

As I’ve described many times, Barnett’s main objection is lower benefits for the state in jobs and tax revenue from increased onshore activity:

The Liberal Premier’s stance is largely in line with the view of the Australian Manufacturers’ Workers Union, which has pledged to vigorously pursue a campaign against float­ing projects that it believes will steal jobs. Sources close to the negotiations described the scenario as a game of chicken. By refusing to alter the lease conditions, Mr Barnett retains the ability to strip the valuable retention leases from the Browse partners in late 2014 unless concessions are made.

WA could also be in a stronger ­position to negotiate with the federal government for a share in expected petroleum resource rent tax income generated from the project in exchange for renewing the state-controlled leases.

Barnett himself has put the argument, rightly,  that Australia needs to move quickly or the window for North Asian directed LNG expansion will close as US and African supplies come on stream. Standing in the way seems a pretty pointless exercise to me.  Federal tax revenue and some offshore jobs is better that neither.

Comments

  1. LOL.. awkward. .

    GSM and the loony light brigade, care to comment on the anti business, job destroying action from Barnett?

  2. I’m fairly sanguine about this project – it will go ahead in one form or the other.

    As for the AMWU what a bunch of hypocrites. Now they are crying the ‘they stole our jobs’ line when the AMWU in cahoots with the usual job and enterprise crushing Greens and GetUp actively opposed JPP acquisition (which until the activist mob got in on the act was a done deal – ffs even the Sea Shepherd with various Green luminaries onboard wanted to grace the shores of Broome and destroy jobs).

    But then if you’re a union official or a Green activist on the public purse you can vandalise the economy at will…after all your own job is never at risk.

  3. I don’t agree with colin barnett on very much but I at least partially do on this. We should see a minimum level of return to the australian community from this resource otherwise I think we are better off leaving it in the ground for the future. I find the ‘something now is better than nothing’ argument to be a particularly weak and obviously based on the assumption the value will be less in the future… a very brave assumption indeed.

  4. Building the Gas Hub on shore was always going to totally F U Broome! Barnett did not care about this -only that he got his way. He’s an ass like all Liberal Leaders before him.