One-third of Queensland’s LNG capacity is owned by foreign governments
While domestic consumers see prices rise, China, Malaysia and South Korea have used state-owned enterprises to scoop up resources
A third of the capacity of projects in Queensland that liquify coal seam gas for export is owned by foreign governments through state-owned enterprises, an analysis by the Tax Justice Network reveals.
The analysis shows China, through Sinopec and CNOOC, Malaysia’s Petronas and South Korea’s Kogas together will own one-third of Queensland’s liquified natural gas output once the projects are all at full capacity by 2020. China alone owns 17.3% of the projects.
The extent of foreign state control of Australia’s gas resources contrasts with Australia’s lack of a gas reservation policy or other means to secure gas for domestic consumption, which the government has come under internal pressure to consider.
A Tax Justice Network spokesman, Jason Ward, said: “Foreign governments have invested in Australia’s natural resources for their own national energy security but the Australian government has been shamefully missing on energy policy.”
Malcolm Turnbull has left open the option of reserving gas and threatened use of export controls in order to secure guarantees from domestic suppliers that more gas will be made available for Australian industry.
A reservation policy is not favoured by the government. The resources minister, Matt Canavan, says it is not “a very good outcome” because rationing doesn’t work in other markets.
The three CSG to LNG projects in Queensland are:
Australia Pacific LNG, with a full capacity of 9m metric tonnes a year (mtpa), is 25% owned by Sinopec;
Queensland Curtis LNG, with a capacity of 8.5mtpa, is 25% owned by CNOOC;
Gladstone, with capacity 7.8mtpa, is 27.5% owned by Petronas and 15% by Kogas.
The ownership figures and liquification capacity are sourced from the Petroleum Economist World LNG Factbook 2016 and confirmed in the Australian government’s eastern Australian domestic gas market study.
The Tax Justice Network analysis also found that five offshore LNG projects (Gorgon, Wheatstone, Pluto, Ichthys, and Prelude) are 87% foreign-owned and 7.5% owned directly by foreign governments. Those include Kuwait (Kufpec), Japan, Taiwan (CPC) and Korea’s Kogas.
Offshore LNG projects are subject only to petroleum resource rent tax and not commonwealth royalties, the lack of which experts estimate cost billions of dollars in lost revenue per project.
Once the North-West Shelf and Darwin projects are added, ownership by foreign governments for all LNG projects rises to 12.5%.
The Reserve Bank of Australia has said that, despite adding billions to Australia’s gross domestic product, the impact of Australia’s LNG export boom on living standards will be reduced by high levels of foreign ownership.
There was a “clear case for reform”, Ward said, adding: “While domestic industry and consumers struggle with sky rocketing energy prices, we have a tax system that gives our gas away for free.
“The Tax Justice Network and many others have called for a 10% royalty on new offshore gas projects to level the playing field across the sector and ensure that we get a minimum price for our resources.”