By now, most of you, like me, are sick of the new Labor government claiming that there is no “quick fix” for the collapse of east coast energy markets.
This must be some kind of record for a new government, alienating every single Australian inside a week of taking power.
To give you some idea of how far behind the curve Labor is, get a load of this codswallop.
Yesterday, a leading east coast gas cartelier, Santos, denied all responsibility for shortages:
“All I’ve got available right now over and above what I’m producing today is 15 wells in the Cooper Basin we’re looking to connect as quickly as we can, which will bring very little gas into the market, and it really replaces natural decline in our current producing wells,” Mr Gallagher said in Melbourne.
“All we can do is drill as fast as we can in the Cooper, right?….What we really need is new fields coming on like the Narrabri gas project.”
Yet, as Mr Gallagher says one thing, he is doing another:
On Wednesday, the Australian Energy Market Operator activated for the first time its Gas Supply Guarantee mechanism to ensure there was adequate gas for electricity generation in Victoria, South Australia and Tasmania.
Under the voluntary mechanism, Queensland’s three LNG exporters divert gas south for power generation. The three ventures involving domestic producers Origin Energy and Santos, as well as global majors such as Shell, redirected gas that was earmarked for overseas into the domestic market.
So, the cartel has no gas. Except for the enormous reservoir reserved for export, which it is now sending south as a ground swell of anger threatens to overwhelm its social license to operate.
This unconscionable behaviour is not new. Way back when Santos first commissioned its LNG export trains for Curtis Island, the then CEO said and did the following:
As Santos worked toward approving its company-transforming Gladstone LNG project at the start of this decade, managing director David Knox made the sensible statement that he would approve one LNG train, capable of exporting the equivalent of half the east coast’s gas demand, rather than two because the venture did not yet have enough gas for the second.
“You’ve got to be absolutely confident when you sanction trains that you’ve got the full gas supply to meet your contractual obligations that you’ve signed out with the buyers,” Mr Knox told investors in August 2010 when asked why the plan was to sanction just one train first up.
“In order to do it (approve the second train) we need to have absolute confidence ourselves that we’ve got all the molecules in order to fill that second train.”
But in the months ahead, things changed. In January, 2011, the Peter Coates-chaired Santos board approved a $US16 billion plan to go ahead with two LNG trains from the beginning….as a result of the decision and a series of other factors, GLNG last quarter had to buy more than half the gas it exported from other parties.
In short, Santos miscalculated its own gas reserves and over-invested in LNG capacity. When it found itself short, it vacuumed up all of the third-party gas that was supposed to supply Australia and exported that as well.
Of all guilty parties in today’s gas crisis, and there are many, Santos is the most responsible. Do you detect a hint of that in its CEO today? Is the firm contrite and making amends?
No, and the long-term pattern of destructive and monopolistic behaviour goes to the conclusion that Santos is a dangerously rogue firm deserving sanction.
So, here’s the “quick fix” solution that Albo’s cowards are looking for. The Australian Government should nationalise Santos.
The rebadged firm, Gas Australia, can then operate as a public corporation with a remit to supply Australia with gas at a reasonable rate of return at the price of $7Gj. This will then benchmark the entire cartel for local prices.
GLNG partners can keep exporting without the 30% Santos share. It will need to declare force majeur on some contracts.
Nationalising Santos will have other benefits too. It will reassure the public that the forthcoming Narrabri gas project won’t poison the entire Great Artesian Basin after Santos also managed to duck the sixteen environmental restrictions recommended by the NSW chief scientist for the project.
It will prevent the firm from pursuing ludicrous “blue hydrogen”. A filthy form of new “clean fuel” that is busy ruining Australia’s climate credentials all over again.
And it will scare the bejesus out of the remaining carteliers plus the coal sector which is where the next fight is going to be over war-profiteering.
The following would also stop:
Everyone wondered whether there was some connection between the government’s direction and its financial indebtedness to the fossil fuel industry. But no one could prove it. Why? Because the Commonwealth doesn’t have real time disclosure of political donations.
Only now, long after the public’s attention has moved on, have those suspicions been confirmed. Thanks to the donations data recently made public on the Australian Electoral Commission site, we know that fossil fuel companies — and the gas industry in particular — were giving generously to both major parties at the time, a whopping $1,329,754 to be precise, with just over half of this from the gas industry.
The Coalition got the lion’s share ($731,534), although Labor collected the not-insignificant sum of $598,220.
If you add to the Coalition’s total for that year the just over $1 million the LNP harvested from fossil fuel via its fundraising entity Cormack, the Coalition’s indebtedness to gas, coal and mining in the 2020-21 period swells to $1,735,048.
Australia could just seize Santos’ 30% share of the GLNG export plant and shut those volumes down.
Or, we could part-nationalise or part-acquire Santos. Expropriate a 20% stake and take board seats to match. Sack management and parachute in some national interest folks instead.
Or, we could just take the whole damn thing.
This may seem a draconian step to some. But that’s only because we’ve all been boiled frogs through a near-decade of steadily increasing gas cartel abuse. In the harsh, cold light of day, this is a national security crisis. A gas cartel is war profiteering by over-shipping gas to China, our major strategic rival. All households and businesses are being pilfered. The banking system is at risk from the resulting inflation and asset price crash. The cartel pays next-to-no tax. The sovereign is being gutted.
Finally, the gas shortage will only get worse from here as the Bass Strait runs dry into the mid-2020s. We need a structural solution or this is going to happen again and again and again.
So, here’s the “quick fix” and long-term cure that Albo’s cowards are looking for.
Nationalise Santos. All problems solved!
