Almost 15 years ago, Chevron Australia and its partners made the final investment decision for the Gorgon natural gas project in Western Australia, marking the commencement of the largest single resource development in the nation’s history.
This milestone was followed just two years later by joint venture investment approval to develop the Wheatstone natural gas project.
The eventual $80bn investment in these two projects, operated by Chevron, was unprecedented for Australia’s energy sector at the time and cemented our place in the country’s energy landscape.
In committing to our share of this investment, Chevron was confident because the decision was underpinned by strong fundamentals: a world-class resource base, a stable regulatory, policy and fiscal environment, sustained demand from premium customers, and unparalleled stakeholder alignment and collaboration.
Gorgon and Wheatstone have become pillars of energy security, supplying about 45 per cent of Western Australia’s domestic gas needs – fuelling the state’s powerhouse mining sector, critical minerals processing, and electricity generation for households – while contributing around 6.5 per cent of global liquefied natural gas supply.
Most of the fundamentals that gave us the confidence to invest in Gorgon and Wheatstone remain. However, recent regulatory and policy shifts have been cause for concern.
While no single policy or regulatory change alone may act as a deterrent to future investment, the cumulative effect of these shifts is challenging Australia’s investment appeal at a time when global competition for capital has intensified.
Elected governments have the right to implement policy and regulatory changes, but they also have a responsibility to ensure reforms don’t result in unintended consequences that negatively impact the communities they serve.
With the federal government’s recently released Future Gas Strategy making clear the critical, long-term role for gas in this country, the need to encourage investment in the development of Australia’s gas resources is obvious and pressing.
But the opportunity to reinstate certainty for the offshore gas sector – and in turn, restore investor confidence – was missed last week as changes to the Petroleum Resource Rent Tax passed through the parliament, while legislation to support changes to the offshore regulatory framework was abandoned.
While the PRRT changes represented another unwelcome policy intervention in the gas sector, hopes had been raised that the ambiguous consultation requirements for offshore gas developments, which have led to costly legal challenges and project delays, might be clarified for the benefit of industry and stakeholders alike.
Contrary to claims made by some, the proposed legislation was not about diluting the rigour of environmental approvals or the rights of traditional owners. It was about providing clarity and certainty for all stakeholders.
But with the legislation now on hold indefinitely, clarity and certainty remain elusive and the question mark over Australia’s attractiveness as a destination for gas investment still lingers.
The Future Gas Strategy has put beyond doubt that gas is critical to the energy transition, to energy security, and to Australia’s continued prosperity. So it follows that preserving the ability to attract investment in natural gas developments, through stable and sensible policy, is essential.
Chevron has plans to make significant investments in the coming decades to maintain supply at our LNG and domestic gas facilities, while working to lower the carbon intensity of our energy production.
These plans, which are contingent on a supportive investment climate, have been developed because we continue to see gas as a vital energy source for Australia and the Asia Pacific region, as communities seek to improve their living standards while reducing their emissions as more carbon-intensive fuels exit the energy system.
Gas-fired power generation provides baseload power and grid stability with its ability to quickly flex up or down when renewable energy, such as solar and wind, is intermittent.
Gas also supports major industries in their efforts to reduce the carbon intensity of their operations while meeting increasing power demand. Take the Pilbara, where a major miner is replacing diesel power generators with gas-fired power until at least the early 2050s to support the electrification of its mine vehicle fleets.
Australia is uniquely positioned to be a global leader in the future of energy. It’s a country endowed with plentiful natural resources that can enable multiple solutions for ensuring energy security and lowering carbon emissions, both at home and for our regional partners.
As we strive to achieve a cleaner and more secure energy future, it is critical that Australia maintains regulatory and policy settings that will encourage investment in all the energy solutions this country can offer.
History shows that stability and certainty inspire confidence and action.
Mark Hatfield is the managing director of Chevron Australia.
