Prime Minister Anthony Albanese has asked Australia’s Treasury to model options for a tax on the windfall profits of gas companies, the Australian Broadcasting Corporation reported on Friday, as well as to suggest reforms to the Petroleum Resources Rent Tax ahead of the annual budget in May.
Australia is the world’s third-largest LNG supplier, shipping A$65 billion ($46 billion) in exports last year, but the value of those shipments is expected to soar this year with the disruption to oil and gas trade from the U.S.-Israeli war on Iran and the closure of the Strait of Hormuz.
Asia spot LNG prices have doubled to three-year highs since the U.S. and Israel attacked Iran in February. Profits earned on long-term contracts linked to oil prices, which make up 75% of Australia’s export shipments, are also expected to surge in three to six months.
The country’s top gas lobby Australian Energy Producers said, however, that higher taxes would stop investment in new supply and lead to even higher energy prices.
“This would be the worst possible time for Australia’s economy and energy security to impose a new, retrospective tax on an essential energy sector,” said Samantha McCulloch, CEO of the producer group.
“Australia is already struggling to compete for investment in gas supply projects as a result of regulatory uncertainty, high taxes, approval delays and unchecked activism.”
Energy Minister Chris Bowen, when asked about the reported tax changes at a news conference in Queensland, said he could not comment on cabinet processes.
“The budget will be delivered in May, and I won’t be commenting on cabinet processes today, tomorrow, or anytime before budget day, and the budget will be delivered by the treasurer,” he told reporters.
He said the government in its first term had already increased the petroleum rent tax, which is aimed at capturing profits from offshore oil and gas projects, raising an additional A$2 billion.
Australia has 10 LNG plants run by companies including Woodside, Chevron, Santos, Japan’s Inpex, Origin and Shell.
LNG exporters have long been criticised for their low tax bills through rules that allow them to earn back the capital deployed to build their plants before paying taxes.
(Reporting by Christine Chen in Sydney and Helen Clark in Perth; Editing by Tom Hogue)