Lake warns of tipping point

AUSTRALIA is approaching a “tipping point”, and is at risk of being weighed down by policy failures that will hurt the country’s competitiveness, Australian Petroleum Production and Exploration Association chairman Bruce Lake said this morning.

Lake warns of tipping point Bruce Lake

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Opening APPEA 2017 in Perth, Lake said that while there was much to celebrate, including adjusting to a $US50/bbl oil price environment since the conference was last in Perth three years ago, competition was rising and policymakers needed to take note.
 
Qatar, the only country so far standing in Australia's way of being the world's biggest LNG exporter within two years, has just lifted its moratorium on new gas projects at North, the world's largest gas field.  
 
And, while the US may have only supplied 1% of global LNG trade in 2016, it will soon add 50 million tonnes in capacity to become the third largest LNG exporter, and is being buoyed by a pro-industry president.
 
Dr Konstantin Simonov, director general, National Energy Security Fund (Russia) and Australia Russia Dialogue, will follow Lake's address later this morning in detailing Russia's gas export strategy in Asia and how it will compete with Australian LNG projects.
 
Intriguingly, Russia is sending its first large-scale delegation to APPEA for the first time this year.
 
Lake said Australia, one of only 18 countries currently exporting LNG, has succeeded despite being a high cost, low risk country, but will fail if it becomes a high cost, high risk country - and seems to be "approaching a tipping point".
 
"Accumulated policy failures are weighing us down," he said.
 
"Policies which add unnecessarily to costs, restrict access to resources and create sovereign risk are eroding Australia's key competitive advantage - a stable operating environment.
 
"We could explain this trend as a sign of wider changes in our country."
 
Yet Lake added that it was easy for industry to complain about how its political culture was "obsessively focused on the moment rather than long-term policy", that confidence in markets is also eroding, the community feels insecure and is sceptical about everything and that community, media and political expectations of industry are "impossibly contradictory".
 
In response, APPEA has been advocating long-term policies to "protect a sustainable operating environment for the industry", and is concentrating on three overlapping themes: access to resources, competitiveness and industry reputation.
 
In the process, he said the lobbyists had discovered that independent science was necessary, but "not sufficient to counter fear campaigns". 
 
"It is essential that communities can turn to impartial, independent agencies which can inform people, mediate any frictions and build trust," he said, highlighting the Queensland GasFields Commission and the Gas Industry Social and Environmental Research Alliance as two such examples.
 
Lake also warned that the mooted COAG review of retention leases, brokered as part of the company tax cut deal, risked creating more uncertainty in an already difficult environment for oilers.  
 
"There is the potential for sovereign risk if costly investments in exploration are lost because of unexpected policy changes," he said.
 

Activist battles

 
He said that activist anti-fossil fuel campaigns were "angry" and "skate over inconvenient facts", aided and abetted by "sections of the media determined to destroy the legitimacy of all fossil fuels".
 
Yet Lake also warned that "there will never be a point when we will ‘win' this argument"  
 
"We live in a democracy - and a social media echo chamber," he said.
 
"All ideas - even those patently true - need to be constantly explained and defended.  APPEA sees this task as core business."
 
He also urged every single person at APPEA 2017 to support and guide the lobbyist's advocacy for the industry. 

 

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