Article by Gerard Cockburn courtesy of the West Australian.
Santos boss Kevin Gallagher warns new supply is urgently needed in WA if the State wants to avoid an east coast style gas shortage .
Speaking to The West Australian after the gas giant’s interim results, Mr Gallagher, pictured below, said State and Federal Governments needed to ensure investments can stack up and bring more supply online.
His comments come amid rising gas prices in the WA market and concerns there is not adequate supply from existing projects , despite the State’s reservation policy.
“WA is challenged for new supply and you’re hearing some of the gas buyers making that point,” he said.
“No major new supplies have come on. The Perth Basin will sort of bring a bit of gas into the market but that alone will still not be enough of what WA needs over the longer term.
” Mr Gallagher stressed the importance of projects in WA’s Browse Basin, including the Dorado project Santos was developing , arguing the supply was needed in order to avoid a supply shortage similar to what has occurred in the eastern states of Australia.
The interim results revealed Santos recorded a first-half underlying profit of $US801 million ($1.2 billion), a fall of 37 per cent on the prior corresponding period.
However, the gas giant flagged cash flows remained resilient despite a volatile price cycle and a more challenging economic environment.
Production for the six months to June 30 fell 13 per cent on the prior year to 45 million barrels of oil equivalent and total earnings slumped 23 per cent to $US2.1b.
The fall in profit and earnings is largely comes after big gains made 12 months ago when prices shot up due to the war in Ukraine.
Santos also flagged no new projects would be committed to while it attempts to resurrect its Barossa project in the Northern Territory , which has been stalled by the courts for failing to adequately engage with all stakeholders on cultural heritage.
Mr Gallagher said he was confident the project would meet all environmental approvals and would resume construction later this year.
He added there were hundreds of jobs in both Darwin and Perth linked to the project and it success of getting approval was needed to create certainty for other offshore projects, including submarine cables and wind farms.
“Whether it be gas projects today, or wind projects tomorrow , we have to get the right regulatory environment to allow these projects to move forward with a degree of certainty once they get project approval,”
Mr Gallagher said. The Santos boss also argued that with the potential for the proposed changes to the Petroleum Resources Rent Tax to be held up in the Senate, the industry needed certainty about Australia’s tax framework to ensure overseas capital flow continued into the country.
The Greens in the Senate are prepared to the block the PRRT amendments to try and double the proposed deductible cap to 80 per cent.
“The Greens focus here is not about a clear or a proper tax system, it is about shutting down our industry,” he said.
“I’d be asking for the two main sides of politics to get behind this, lock it in and provide the certainty that we all need going forward .
” The interim results also showed that free cash flow for the first half fell 34 per cent on the prior year to $US1.13b.
