Cowardly Albo defends vicious gas cartel

Cowardly Albo is out defending the gas cartel again today:

“WA got it right all those years ago,” Albanese said of the state’s gas reservation policy that quarantined 15 per cent of its gas reserves for domestic use.

“The decision on the east coast is one that was made by former governments to not go down that track.”

Albanese said the government was looking at all options to secure gas supply, but noted it would be more complicated to bringing in an eastern gas reservation now.

“Once you have contracts issued and in place, you have issues of sovereign risk, and it’s not as simple as being able to intervene halfway through all processes.”

Yes, you can. It happens all of the time and is forgotten in a month. 70% of the gas goes to China so who cares.

Look. It is not the fault of Australian governments and there is no sovereign risk. They were lied to by the gas cartel:

As Santos worked toward approving its company-transforming Gladstone LNG project at the start of this decade, managing ­director David Knox made the sensible statement that he would approve one LNG train, capable of exporting the equivalent of half the east coast’s gas demand, rather than two because the venture did not yet have enough gas for the second.

“You’ve got to be absolutely confident when you sanction trains that you’ve got the full gas supply to meet your contractual obligations that you’ve signed out with the buyers,” Mr Knox told ­investors in August 2010 when asked why the plan was to sanction just one train first up.

“In order to do it (approve the second train) we need to have ­absolute confidence ourselves that we’ve got all the molecules in order to fill that second train.”

But in the months ahead, things changed. In January, 2011, the Peter Coates-chaired Santos board approved a $US16 billion plan to go ahead with two LNG trains from the beginning….as a result of the decision and a series of other factors, GLNG last quarter had to buy more than half the gas it exported from other parties.

…In hindsight, assumptions that gave Santos confidence it could find the gas to support two LNG trains, and which were gradually revealed to investors as the project progressed, look more like leaps of faith.

…Santos figured the gas it was taking out of east coast markets would be filled by accelerated production from the Cooper Basin (fuelled by the GLNG ­supply contract revenue), gas from the Narrabri coal-seam gas project in NSW and helped by the production of shale gas.

Unfortunately, shale drilling did not return hoped-for results, an oil price slump in late 2014 heavily restricted more Cooper Basin drilling and a community backlash, along with regulatory hurdles, stymied Narrabri.

Even before oil prices slumped, Santos revealed its call on domestic gas would be greater than flagged. In a June 2014 presentation slides to an analysts tour of the GLNG facility were told that third party gas would provide between 410 to 570 terajoules of gas per day, or the equivalent of up to half of total east coast domestic demand, even though it was planning to drill 200 to 300 domestic wells a year.

Lies or mistakes. It doesn’t matter. The cartel overbuilt its LNG export trains on a false assumption that it used to convince Australian governments that no regulation was necessary.

This is only broken contract. The economic and social license to operate. Why must all other Australians suffer income deprivation and massive wealth losses because a few oil and gas dills got it wrong?

The stupid part of it is the foreign governments know it is coming:

“During my travels as premier I had governments internationally — and I’m talking about national governments — just basically laughing … that Australia is crazy not preserving some of its gas,” Mr Barnett said.

Declare force majeur and drop the export volumes for a fixed local price of $7Gj.

Then do the same for coal.

No energy problemo.

Houses and Holes
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Comments

  1. There is more sovereign risk with the price spike to downstream business and families coping the brunt, then breaking contracts of a cartel that have earned $167B in less then a decade.

    who give a flying hoots about sovereign risk, we cancelled the french subs.

    • Exactly.

      They’re beliving the BS from the companies, who are at once talking their book and believing their BS.

      A market ‘shock’ would be short and sweet if you declare the reservations permanent, like WA.

      Markets will just adapt.

      The Chinese can buy more Russian gas and coal anyway – it’s what they are already. We just shouldn’t have to pay for it so directly.

      • We have heaps of coal. Everyone stops new coal plants, close existing ones down – and wonder why there are power shortages??? Seriously, its gases fault!

        This whole gas discussion is patiently dishonest. Put up the graph that show how cheap solar power is, oh, and add in that non-existent battery tech as well.

  2. RomulusMEMBER

    The messaging from Albo stinks. FFS at least make the FF companies think you are going to reserve their gas/coal so they get more into line. Sovereign risk give me a break – the US president can ban oil/gas exports at the stroke of a pen – hows that for sovereign risk. Also did China give a flying about sovereign risk when they imposed tariffs on us.

    Stop parroting industry lines Albo.

    • So what exactly is the sovereign risk? That if you make huge super profits you may need to set aside a small percent of your goods for the local market.
      A slight downward revision to once a generation super profits IF locals are getting the rough end is hardy a scary barrier to investment here.

  3. The electoral math is pretty simple. Defend the interests of 20m voters by reserving gas and implementing export controls. Or defend a handful of foreign-owned companies operating an energy cartel.

    It’s a no brainer if Albo wants to stay in government.

    • +100

      Amazing that when politicians talk about sovereign risk it is never in the context of their own sovereign citizens.

      Not withstanding that the whole idea of that risk is laughable! the world is still more than willing to buy energy from Russian on the pure basis of need and yet apparently a 1st world nation like Australia breaking some exports deals to ensure that cities have power is somehow going to give us an African credit rating….. f**k me

    • The electoral math is pretty simple. …

      It’s a no brainer if Albo wants to stay in government.

      Well no, it ignores the reality of the electoral math of the last election.

      They’re not a desired party, they are still replete with fringe politics … and they attracted only 32% of the primary vote…

      They didn’t win, the LNP lost…. they lost so bad that they aren’t going to get 18 seats back for the next election… but what the LNP lost… mainly went to parties other than the ALP.

      The math is the electoral allocation is more disparate than it has ever been, and the concomitant rhetoric surrounding it is more irrational than it has ever been.

      You’re asserting “Do this (gas policy) and the (rational) voter will come into the fold” … which bears no resemblance to what is actually going on.

      The ALP is faced with “We have a tiny amount of backers (32% of the primary vote), our policy drivers are generally reprehensible to the wider Australian public, and the punter is moving towards permanent independents when they’re dissatisfied… Steggal, Lambie, etc…

      The ALP is not weighing up “Let us make some more Chifley like determinations, and we’ll rule forever”…

      They know “We’re an undesired party, the sh!t-stain of Australian politics coincidentally lumped into government, and we have no political capital at all. Any loss of capital goes towards immovable zealots we cannot dislodge… we don’t want to face that in 2025.”

      Bleat and moan all you want… you’re coming form a position they “must do what’s best for Australia”…

      They’re coming from a position “How do we not lose in 2025″….

      I know what’s going to take precedence.

      • What are you talking about? Letting the energy crisis rip, and destroying household budgets, businesses and the economy, is the very recipe for social unrest and electoral annihilation in 2025.

        Voters would reward Labor for fixing the energy mess. Pissing off the energy cartel would be an added bonus as it would ingratiate Labor with the electorate.

        • What are you talking about? Letting the energy crisis rip, and destroying household budgets, businesses and the economy, is the very recipe for social unrest and electoral annihilation in 2025.

          They can have a compliant media run cover for anything to do with this…

          “Impacts of transitioning to a carbon free economy (like the rolling blackouts in the US are doing now), blame the past government, etc.”

          But again, you’re conflating rational voters… with what we have today….

          Voters would reward Labor for fixing the energy mess.

          Rubbish they would. I’ve already addressed that

          There is no semblance of the voter being grateful for anything. If rolling blackouts are disguised under rainbow flags and a trending hashtag, the electorate would lap it up and a ‘needed sacrifice’…

          As long as these idiots are distracted, then the government of the day will go on lining their pockets.

          Pissing off the energy cartel would be an added bonus as it would ingratiate Labor with the electorate.

          We wouldn’t have our entire FF generation in “end-of-life” mode is we were rational.

          • Your own graphs show the lowest rate of home ownership amongst under 35’s in Australia since forever. An extended rent-for-shelter option has the effect of hurting hip pockets more than ever…. but as long as we sell the bootstraps narrative all is OK.

            Rampant immigration hits wage share more than any other factor, hitting hip pockets… but as long as we sell “Australians are becoming less racist, here’s your pat on the head” narrative, all is OK.

            Gutting Australian manufacturing killed off latent skill succession, and our ability to creative wealth, thus gutting future (well 2003’s future is now) hip pockets…. but as long as we sell the narrative we’re a post-modern economy, all is OK.

            I look at things like that as evidence and I’m not sold on your theory.

          • What I’m saying is… someone like Mark McGowan is bullet proof. He will do anything he wants for 8 more years.

            At a federal level, the LNP aren’t getting 18 seats back so they’re not the next government.

            But the ALP can easily lose 2 seats, particularly as the only appeal to 32% of the country….. and they are no longer (majority) government.

            The flight of fantasy here is “by good governance, which a gas reservation system is… will demonstrate the ALP is on top of their game, and this 32% vote and 77 seat representation position will strengthen”.

            Nice in theory, but the ALP no longer appeals to rational thought.

            An appeal to rational voters isn’t a reinforcement of their constituency, its a substitute of their constituency.

            That’s too much of an unknown. They will fortify their 32%, not rock the boat and now work to solidify their post-parliamentary careers.

      • drsmithyMEMBER

        They didn’t win, the LNP lost…. they lost so bad that they aren’t going to get 18 seats back for the next election… but what the LNP lost… mainly went to parties other than the ALP.

        What were those “parties other than the ALP” campaigning on that got them elected ?

        • Errant trash mainly. Fringe parties never have a holistic policy suite.

          Some about 3% interest rates on PPOR’s, some abut Uluru treaty’s, some solely on moving the economy to reducing carbon emissions, some about taxing billionaires. I didn’t even pay attention to One Nation this time so I don’t know what their centerpiece policy(s) is this time.

          None of these indicate rational decisions, rather a rejection of the existing options. The result by way of these fringe groups is a herding towards ones own biases.

          • Which is my point…

            The ALP didn’t gain votes, they may have gained seats by way of 2PP, but they’re not coming from a position of strength. They’re coming from a position of being less weak than the LNP.

            When you have a position of strength, by way of harvesting votes from the other team, that’s called political capital.

            Governments are then inclined to ‘burn political capital’ to implement unpopular decisions.

            This ALP has no political capital… they have 32% of the primary vote, and 77 seats to work with. They lose 2 seats, and they’ll be required to form a coalition. I don’t think they have a favourable memory of dealing with a coalition.

          • drsmithyMEMBER

            Your argument is Labor didn’t win more seats because they are “replete with fringe politics”.

            Meanwhile:
            * 2 LNP seats and 1 ALP seats were won by the Greens, who I am going to assume are even more “replete with fringe politics”.
            * the remaining LNP seats were won by Teals, who it seems also fair to assume are “replete with fringe politics”

            The reasonable conclusion here is that those parts of the electorate are actually onboard with some of those “fringe politics” and that Labor could, by supporting them, at least prevent the LNP from getting them back.

            In any event, the ALP isn’t going to need to burn any political capital with the electorate to tell resource companies to GTFO and make electricity cheaper.

            (And even if they were, the next election is three years away so who cares.)

  4. Grand Funk RailroadMEMBER

    It appears Ed Husic has the message

    Domestic gas reserve, profits tax should be on the table to deal with crisis: Husic

    https://www.smh.com.au/national/australia-news-live-energy-chief-says-crisis-boosts-case-for-renewables-russia-sanctions-121-australians-20220617-p5auf8.html?post=p53tdc#p53tdc

    Federal Industry and Science Minister Ed Husic says a domestic gas reserve and windfall profits tax should be considered as means to address the ongoing gas crisis.

    Husic told RN Breakfast host Patricia Karvelas he was “absolutely agitated” with the gas companies, and he said the government needed to send a signal the businesses could no longer place the burden of the crisis on the public and the national economy.

    “I’ve got a great deal of sympathy for the view in the broader public that these are Australian resources that should be made available for use by households,” he said.

    “If we’re shipping out of some of our ports seven times the level of supply that is used by the Australian market in one year, it’s not an issue of supply here. This is not an issue that we don’t have the gas. It’s the supply that is available locally at a price that works for industry.”

  5. The Travelling PhantomMEMBER

    Labor and Liberal parties have to protect and encourage the big companies, cut red tape for them and legislate to make more profits for them…not sure why the shock of them not doing so

  6. Display NameMEMBER

    After China has put tariffs on barley, wine, beef, cotton, lobster, timber and coal, we should return the favor and put an equivalent 80% tariff on any gas going to China. They will soon switch to Russian gas and we can redirect that gas domestically.

    • I dunno – I think the Australian populace is behind this idea – the energy market has failed the pub test so badly its been quasi-nationalised indefinitely, and common people know it’s broken; and, they’re wondering why the hell they’re paying so much for stuff dug up next door, so the Chinese can build more war ships and harass us in our own backyard, and help the Russians smash our liberal friends…

      Aussies would be behind this, methinks. It would be a truly positive and momentous economic and political decision if they pull the gas and coal triggers.

      • Ah, yeah, they would stand up for Albo if Shifty & co, encouraged by the resource sector, even contemplated to move on him.
        It’s the Australian way, right?

      • Oh Totes where art thouMEMBER

        Also, and I know this is quite shocking to say, if Albo got out and sold the policy the people would fall behind it.

        Labor needs to channel their inner Gough and PJK. Communicate vision while flicking off the gas companies with wit.

  7. Albo needs to grow a set. Every day he waits is another day a productive company will close its doors and never open again.

    Sure, Gillard the clown is to blame, but Albo can fix this with the stroke of a pen!! #TREASONOUS Bastards

  8. They keep saying market risks and reputation – but once it’s done it’s done. Leave the reservation in place and markets move on – quickly…they just want to know.

    Crikey, Labor have seen similar issues with climate change issues – even companies that didn’t really believe in it were just asking for plans to be made and cemented so they could plan and get on with it.

    So…..just plan and get on with it. Stop listing the the BS from the vested interests – they just want to keep gouging. Markets are very, very pragmatic, and it is only a relatively small fraction of exports being reserved, really.

    Australians are livid – they are not seeing the benefits of this ‘boom’ at all, only really foreign multi-nationals flicking us chips.

    Stop believing vested interest rentiers and think of Australians – it’s right AND you will be lauded as a hero for a generation, and be able to stick it up the LNP for as long.

    • Great articles.thanks for sharing. If banana state like Congo can do it then what does it say about us? Statements made about Australia by late Lee Kuan Yew all those years ago, come to mind.

  9. My first post on the site! Just wanted to say David Llewellyn-Smith is absolutely kicking butt with these great posts, keep up the pressure! Joined specifically to support his great writing here.

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