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Oil and gas struggles with public perception

AUSTRALIA’S oil and gas sector is facing tough choices on the public face it puts forward.

Oil and gas struggles with public perception Zoe Yujnovich and APPEA CEO Malcolm Roberts

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The theme of the opening event at today's APPEA conference was not resilience to a changing energy mix but an admission by industry that it had failed: it had not kept up with public opinion, not allayed worries, and not fought back against anti-fraccing and anti-fossil fuel campaigns. 
 
Both Santos CEO Kevin Gallagher and Shell and APPEA chairperson Zoe Yujnovich explained in detail that industry had stayed removed in boardrooms and comfortable with spread sheets.
 
"We're losing the PR battle," Gallagher said.
 
"We must secure society's support for what we do," Yujnovich said. 
 
The challenges being discussed were reflected in conflicting sets of data this week about contribution to the national economy.
 
Figures from APPEA itself show that the oil and gas sector recorded a trade surplus for the first time in 13 years during 2017, driven largely by a 35% increase in the value of LNG. This saw the value of oil and gas exports reach $30.5 billion, compared with imports valued at $26.9 billion.
 
LNG exports are likely to continue to rise in the near future, driven by the startup of new projects and sky-high demand and rising prices in the Asian region in particular.
 
Australia's gas production, including both LNG and domestic use, increased by almost 21% in 2017 and has more than doubled over the last decade.
 
At the same time, the story around the tangible benefits of the sector took a hit with news that a looming decline in production from the gasfields underpinning the massive North West Shelf LNG project was set to strip $500 million in royalties from Western Australia's budget.
 
State treasury modelling showed that WA's share of revenue from the cornerstone project could plunge by 42.2% from $845 million in 2018-19 to $487 million in 2021-22.
 
That will put a major dent in plans by the WA government to return the state budget to surplus by 2020-21, with the NWS unlike other offshore oil and gas developments in Australia in having 70% of its Commonwealth royalties directed back to the state, stemming from a deal struck at its 1970s inception.
 
Moves to supplement declining supply from new resources such as NWS operator Woodside's Scarborough field would not be subject to the same arrangement, and thus create potential for troubles between state and federal jurisdictions.
 
These have already been rife in WA in recent years owing to a belief that the state is being short-changed by GST-linked redistribution of federal budgetary funds.
 
It also comes as the oil and gas industry faces mounting public scrutiny over its general level of economic contribution to Australian society, particularly concerning the purported tax avoidance of multinationals such as ExxonMobil, Chevron and Shell.
 
Furhermore, APPEA saw a small protest this morning organised by Greenpeace and the Wilderness Society against Norway's Statoil, which plans to drill in the Great Australian Bight.
 
 
Yujnovich also used her speech promoted the ongoing benefits of maintaining current production projects in terms of capital injections in favour of the overwhelming public and media focus on greenfield developments. 
 
"There has been little discussion or understanding on the scale of the enormous task ahead - simply keeping existing domestic markets whole and feeding the appetite of 11 LNG trains." 
 
Also at APPEA, federal resources minister Matt Canavan and South Australian premier Steven Marshall noted that energy industry public engagement had not been what it could be and that increased government and industry talk of jobs and growth had so far not helped to overcome this.

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