Barnett blocks Browse

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WA Premier Colin Barnett is not happy with Woodside. From The Australian:

…”Woodside has had very little contact with the state government over the last couple of months,” Mr Barnett said yesterday.

He said he believed the state had real leverage over the Browse project because it owned 30 per cent of the project’s biggest gasfield known as Torosa — a figure that is significantly higher than most industry estimates.

Most of the Browse gasfields, which cover seven leases and contain 15.9 trillion cubic feet of gas, are in commonwealth waters.

…Mr Barnett said yesterday he would refuse Woodside’s requests to amend the two retention leases that cover WA’s share of the gas, in a move he claimed could hinder the Browse joint venture’s efforts to market any of the gas.

…”Those retention leases run through until November 2014 and we are not intending to amend them.”

Mr Barnett said he had told Woodside that he may reconsider his opposition to amending the leases if the company agreed to build a $2bn supply base for the project at James Price Point.

So there you have it. I have some sympathy for Barnett. The idea of of giant extraction ships funded by foreign capital and arriving from from Korea, taking the gas out and sending it away without setting foot on land, is going to rankle most patriots.

But that’s business in the big city my friends and without the efficiency FLNG delivers said gas will just sit there.

The key is to have the right tax regime to get an appropriate return for the owners and have fiscal settings to ensure that you’re not reliant for economic activity upon the development. Oh, that’s right, we didn’t get to that yet did we…

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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Comments

  1. I have to say i agree with Mr Barnett digging his heels in on this one. I work in the O&G field and if you have a quantified field in a relatively low risk country then sooner or later someone will come to the party on our terms. We get screwed over by big international companies too often. On the James Price Point aspect i am not so sure, but as you say if we have the right tax regime in place then i am sure an agreement can be reached where it is a win-win

  2. Where is the MB loony-right brigade (aka 3d1k and GSM) to criticize Barnett for this “anti-business”, “jerb killing” action?

  3. We’ve got PRRT what more do you want.

    I sympathise with Barnett – it would have been a great project but even the FLNG is cool in operational terms – unions and greens killed JPP, bloodymindedness focused toward the companies misses the target .