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Oil and gas giant ExxonMobil has wound back warnings that new regulations will freeze investment in Australian gas projects, declaring talks with the Albanese government have been constructive and are starting to rebuild industry confidence despite other companies flagging risks.
United States-based ExxonMobil was among the most strident initial critics of the government’s decision in December to impose new rules on the gas market to tame soaring energy prices, describing the introduction of emergency price caps as a “reckless free-market intervention” that would drive investment away from Australia.
The Gippsland Basin venture, owned by ExxonMobil and Woodside, supplies 40 per cent of the east-coast gas market.
In one of the most immediate responses to the policy uncertainty, ExxonMobil and joint venture partner Woodside moved from a yearly to a six-month investment cycle for committing further funds to projects needed to maintain gas output from their Gippsland Basin operations.
The 50-year-old fields in the Bass Strait have traditionally supplied up to 40 per cent of east-coast gas demand, but recently have been rapidly drying up.
David Berman, ExxonMobil Australia commercial director, said consultations with the government on the extent of longer-term regulations to be included in a new mandatory code of conduct had since been encouraging and the “uncertainty is beginning to resolve”.
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“Back in December, when the intervention in energy markets was announced, that was of great concern – we felt it was inevitable that it would result in less investment, less gas production and higher prices for consumers,” Berman said.
“What I would say is the way the government has engaged since December has been encouraging, and with the release of the code of conduct last month, I think we are getting to a better place.”
Following months of friction between the Albanese government and gas producers, the mandatory code of conduct governing the sector was released in June. The code extends a $12-a-gigajoule cap on domestic gas sales until 2025, but exempts smaller producers and those who make significant commitments to supply gas domestically rather than export it overseas as liquefied natural gas (LNG).