Santos chief executive officer and managing director Kevin Gallagher expects the Australian Government’s National Gas Infrastructure Plan will encourage investment in new local supply and infrastructure.
”The best thing the government could do to get gas prices down on the east coast is to remove barriers to investment and promote private investment in new gas supply sources and pipelines through stable energy and fiscal policy,” Gallagher said.
In New South Wales, the company’s Narrabri gas project, which was a key part of the solution options put forward in the plan, is now approved and ready for appraisal, with up to $215 million to be invested over the next two years, boosting local jobs and the region’s economy.
However, as a 100 per cent domestic gas project, the domestic gas price must cover the full cost of development and provide an appropriate return on investment.
Gallagher also welcomed Energy Minister Angus Taylor’s comments supporting open, transparent markets rather than price ceilings and re-iterated Santos’ commitment to ongoing investment in new supply for both domestic and export markets, saying that, “scale is important because it gets unit costs down and therefore, puts additional downward pressure on domestic gas prices”.
The Santos GLNG joint venture continued to develop new gas supply in Queensland’s Surat/Bowen coal seam gas fields, drilling over 700 wells and investing around $2 billion in gas field developments over the past two years. And in 2021 the joint venture will invest a further $800 million with Santos also investing another $180 million in other wells and gas development in this region.
In the Cooper Basin, South Australia, and southwest Queensland, Santos is investing $670 million drilling new wells in 2021 to maintain and grow supply for the east coast domestic gas market.
“When it comes to internationally competitive prices, our Australian customers always pay less for gas than our Asian customers and that is evident from our public ASX reports,” Gallagher said.
“But it is nonsensical that because customers in Louisiana get $4 gas, then so should customers in Sydney. The cost of gas in various countries will always depend on the cost of supply, just as labour costs in various countries will depend on wage rates in those countries.”