Shares of Australian LNG producers rose on May 8 after the government adopted more favorable-than-expected changes to petroleum tax, ensuring the load was shared across the industry and did not impact growth projects.
Woodside Energy Group Ltd., the country's biggest independent oil and gas producer, was trading 2.5% higher, while closest rival Santos Ltd. was up 1.5% as at 0249 GMT. Beach Energy Ltd. jumped 2.5%.
Over the weekend, Australia announced plans to change its Petroleum Resource Rent Tax (PRRT) to increase the tax paid by the offshore LNG industry, moves that should increase revenue by A$2.4 billion ($1.6 billion) over the next four fiscal years.
Treasurer Jim Chalmers said reviews found that aspects of the PRRT were better suited to oil projects than LNG projects, and the deductions cap and other changes would help address that.
"The deductions cap seems to have struck a good balance between sharing the load across industry, earning more cash tax for government, and not threatening economics of growth projects," analysts at Citi wrote in a note.
"The deductions cap only starts when a project has been producing for 7 years, so that the IRR (internal rate of return) of new projects isn't materially compromised, which is a relief for Browse and Scarborough."
Woodside's $12 billion Scarborough development is expected to start producing LNG only in 2026. The Browse project, estimated to cost $20.5 billion, is Australia's largest untapped gas resource.
"We will continue to engage constructively with the government on ways to support a functioning market and a positive investment climate for industry to deliver the energy Australians need," a Woodside spokesperson said.
Citi said this would likely be the last change to PRRT before the legislation expires in April 2026, when it may require an overhaul.
Recommended Reading
Exclusive: What’s Needed to ‘Get Things Moving’ with CCS
2024-03-05 - CCS momentum is brewing, says Katja Akentieva, vice president of New Energy Solutions for the Western Hemisphere at TGS. Now it's time to capitalize on that momentum in this Hart Energy LIVE Exclusive with Jordan Blum.
Worley to Design CCS Facilities for Bayou Bend JV
2024-05-13 - Bayou Bend is a carbon capture and sequestration joint venture between Chevron, TotalEnergies and Equinor located along the Gulf Coast in Texas.
Trace Carbon Solutions Applies for First Phase of Class VI Wells at Evergreen Hub
2024-03-12 - Trace is applying for its subsidiary Evergreen Sequestration Hub to be allowed to permanently sequester CO2 in underground geological formations in Louisiana.
Red Trail Energy Issues Carbon Removal Credits
2024-03-06 - Red Trail Energy’s CO2 removal credits is the largest durable carbon removal project registered on the Puro Registry to date.
No Silver Bullet: Chevron, Shell on Lower-carbon Risks, Collaboration
2024-04-26 - Helping to scale lower-carbon technologies, while meeting today’s energy needs and bringing profits, comes with risks. Policy and collaboration can help, Chevron and Shell executives say.