Energy security, moratoria and domestic gas: Australia, LNG and its gas policy catch-22*
Christopher Flynn A C and Emily Tsokos B CA Gilbert + Tobin (Sydney).
B Gilbert + Tobin (Perth).
C Corresponding authors. Email: cflynn@gtlaw.com.au; etsokos@gtlaw.com.au
The APPEA Journal 57(1) 26-40 https://doi.org/10.1071/AJ16232
Accepted: 3 April 2017 Published: 29 May 2017
Abstract
In a region undergoing rapid and profound geopolitical change, energy security will be more important than ever. As a key regional energy producer, Australia will play a fundamental role in the energy security of its major trading partners. However, ironically, it also faces energy security challenges of its own.
Over the next 12 months, as Australia becomes the world’s largest producer of liquefied natural gas (LNG), its own domestic gas demand will also continue to grow. At the same time, one or more of our LNG facilities is expected to start to face significant upstream gas supply constraints. All of them will experience greater global competition. Yet, ever increasing pressure continues to be exerted on Australia’s governments to restrict, curb or even completely stop further exploration and development of hydrocarbons around the country. In New South Wales, Victoria and the Northern Territory that pressure has effectively ended new gas exploration and development for the foreseeable future. Elsewhere, it has resulted in increased regulation and uncertainty.
There is a natural tension between Australia’s domestic energy security, its economic and national security interests in remaining at the heart of regional energy security, and important environmental objectives. However, these concepts and priorities do not need to be mutually exclusive, but can be achieved in balance with the right policy settings.
This paper will discuss the political impasse we have reached, and the main policy options available to thread the needle between securing an economic domestic supply of gas and allowing our gas explorers, producers and exporters to continue to grow. It will seek to provide a practical analysis against the backdrop of the rapidly changing regional economic and political environment, as well as seeking to inform and stimulate the broader debate.
Keywords: Australia, China, domestic gas, emissions intensity, energy balance, energy mix, energy policy, energy security, environmental policy, exploration, gas reservation, leadership, moratoria, natural gas, net exporter.
Christopher Flynn is a partner in Gilbert + Tobin’s Corporate Advisory and Energy + Resources groups. He advises companies and government clients on projects and transactions in the energy and resources sector, and in public international law. His experience spans throughout Australia and more than 50 other countries. His clients include Total SA, Rio Tinto, Engie (formerly GDF Suez), Kumul Petroleum Holdings Limited (PNG’s national oil company), KKR, Fotowatio Renewable Ventures, GLNG Operations and Orica Limited. Chris also led (pro bono), the international legal team that helped to secure the freedom of Australian journalist, Peter Greste, from incarceration in an Egyptian gaol. He also provided support to counsel assisting in Chan and Sukumaran. |
Emily Tsokos is an experienced energy and resources lawyer with particular expertise in the oil and gas sector. She has transactional and advisory experience in a range of energy and resources projects across multiple international jurisdictions. Emily has advised on project structuring and prepared key agreements on several international LNG projects. She also has extensive experience in petroleum asset acquisitions and sales, multi-jurisdictional M&A, joint venture arrangements and commercial contract negotiation. Prior to joining Gilbert + Tobin, Emily worked in-house at Shell as legal counsel to the upstream business (on Prelude FLNG prior to FID) and as a senior associate in international law firms in Perth and Paris. Emily holds a Bachelor of Laws and a Master of Laws from the University of Western Australia. Emily is admitted to the Supreme Court of Western Australia. She was also previously registered at the Paris Bar. |
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