Australia pauses pro-upstream offshore oil, gas reforms

Australia's federal resources minister Madeleine King acknowledges the political situation in the nation's upper house of parliament the Senate prevents any deal to clarify consultation requirements for the nation's offshore oil, gas, carbon capture and storage (CCS) and renewables sectors.

The Senate last week passed the Labor party-led federal government's legislation on changes to deductions permitted under the Petroleum Resources Rent Tax (PRRT) and a new fuel efficiency standard for light commercial and passenger vehicles. But the deal struck with the Greens party and two independent senators meant the government withdrew amendments designed to specify which stakeholders must be consulted under law before receiving environmental permits.

King blamed the Greens for her government removing the amendments from the agenda.

"My disappointment is not for the industry but the community that will remain subject to inadequate and inappropriate consultation requirements for longer," King said on 21 May at the Australian Energy Producers conference in Perth. "The Greens political party and the crossbench independents and others promoted widespread misinformation in relation to the proposal that would ensure the community had the benefit of clarity and certainty in consultation."

Environmental lawyers delayed field drilling and pipeline laying for Australian independent Santos' $4.6bn Barossa backfill project from late 2022 until early 2024, citing insufficient consultation with traditional owner groups, in a case ultimately dismissed by the Federal Court of Australia.

Changes to offshore laws were promised by the federal government in January with concerns legal tactics could lead to further lawsuits aimed at driving up costs for LNG backfill, offshore wind power projects or CCS. Climate campaigners saw the changes as a vehicle for easing scrutiny on developers and its politicians promised to oppose any changes.

But having dealt with the Greens instead of the Liberal-National coalition on legislation for fuel efficiency and the PRRT because of the latter's demands that the approvals process for oil and gas be expedited, Labor is less likely to now receive support for changes to consultation ahead of next year's federal election.

The future gas strategy released by the federal government this month said new supplies are urgently needed, as gas-fired power generation will likely replace firming capacity provided by retiring coal-fired power plants.

The report also found multiple reasons for Australia's low gas exploration investment, including difficulties with the approvals processes, legal challenges and market interventions that may lead international companies to focus on lower cost and lower risk fields in other jurisdictions.

By Tom Major