“With exploration,you take a fair amount of commercial risk well ahead of any sales,” O’Neill said. “It’s very difficult to justify taking that risk when you have uncertainty around the price that you can get for your product.”
The comments add to questions about the longevity of gas output from the offshore fields in Bass Strait,which Woodside owns with ExxonMobil and provide about 20 per cent of the eastern seaboard’s annual gas demand,but are rapidly declining.
The Albanese government last month passed emergency laws capping the price of domestic gas at $12 a gigajoule for the next 12 months and is developing a mandatory code of conduct to require producers to sell gas at “reasonable” prices to local retailers and industrial users beyond this year.
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The intervention has been welcomed by large manufacturers,which have been struggling to absorb skyrocketing costs putting their factories at risk of closure. However,the move has been met with strong resistance from gas producers,who warn the regulations will put at risk crucial investments to develop longer-term local gas supplies to prevent fuel shortages in coming years.
Earlier this week,Adelaide-based gas company Cooper Energy said it had to review the timing of its plans to sanction an offshore gas project in the Otway Basin,known as OP3D,which was set to supply utilities giant AGL with up to 10 petajoules of gas a year from 2025. The company had previously planned to make an investment decision within the next six months.
“The federal government’s gas market intervention legislation,introduced in late December,and in particular the associated proposed mandatory code of conduct,are expected to impact the timeframe for OP3D decisions,” Cooper Energy said.