Australian Domestic Gas Outlook speech

Good morning. Firstly, I would like to acknowledge the Traditional Owners of the land where we meet today, the Gadigal people of the Eora Nation, and acknowledge their continuing connection to country and pay my respects to Aboriginal and Torres Strait Islander cultures in all places and to Elders past and present.

There couldn’t be a better time for me to be addressing the topic of ‘reliable and affordable gas today and for the future’.

The first salvos in a five-week election campaign have already been fired. The critical role of gas in the energy transition and for the Australian economy is in the spotlight again.

Energy policy is of national strategic importance. It warrants reasoned bipartisan alignment to serve the national interest. So, caution should be exercised to avoid the risk of unintended consequences when energy and gas policy becomes the subject of election dynamics.

For too long, the conversation around energy policy and the energy transition has been polarised and politicised – it has been characterised as a zero-sum game and this has not served the millions of businesses and households that rely on secure, reliable and affordable energy.

Australia has an extraordinary opportunity to thrive and prosper through the energy transition, but to do so we need to:

• prioritise energy security (for Australian consumers and for our regional trading and security partners); and
• attract significant and sustained private investment to our shores.

Right now, our regulatory frameworks and our ideologically polarised and politicised debate about energy policy, will not deliver multiple and sustained waves of private investment across any of the vectors of the energy transition.

And natural gas – which is critical for our national prosperity, for our basic energy security, and to support a deeper penetration of renewable generation – has been in the crosshairs of this debate for too long.

A balanced energy transition, that maintains secure and affordable energy for Australia and for the world as it moves to net zero, requires:

• unlocking investment and facilitating successful energy projects;
• while maintaining the highest environmental and community engagement standards;
• and at the same time building the lowest cost, most reliable pathways to support Australia’s emission reduction targets and delivering energy security.

If that can be done, the debate shifts from ideology to a balanced and rational discussion about the opportunities, the trade-offs and the choices we will all need to make; it moves the narrative to what is truly in the national interest.

I’m here today as the Country Chair of Shell Australia, a company that will soon celebrate 125 years in Australia. Shell has been supplying Australians with energy, connecting people and creating impact with scale for as long as Australia has been a nation.

Shell, one of the largest foreign investors in our country, delivered the first bulk kerosene shipment to the fledgling nation in 1901. Today we’re:

• meeting almost 15% of east coast gas demand;
• supplying the energy needs of 25% of Australian businesses;
• delivering material volumes of LNG to our regional trading partners; and
• building and operating a portfolio of solar, wind, gas-powered generation and battery projects across the country.

Australia has a deeply interconnected energy market and while the focus of this event is gas, many of the issues also impact investment in renewables, firming and critical minerals.

It is time for a grown-up, honest conversation about not just the opportunities of the energy transition, but also the realities, the dilemmas and the trade-offs.

Australia cannot dismantle the current energy system faster than we can build the low carbon energy system of the future.

There are three fundamental myths about gas that are distorting the debate in Australia – putting our energy security, our national prosperity and our path to net zero at risk.

These myths are going largely unchallenged. It feels like politics is trumping achievement of common ground on the energy transition. And the consequential lack of regulatory reform is smothering the investment signals needed for sustained investment in gas and all of the energy transition vectors that Australia so desperately needs.

So, let’s address those myths head on.

Myth 1 – We can ban all new gas investment without consequence

Calls for a blanket ban on all new gas investments imply that Australia can simply ‘flick the switch’ with no impact to our energy security or our economy. That is both irresponsible and misleading.

In July 2024, Energy Quest released an analysis of the impact of banning all new gas investments. The Energy Quest report found that a halt to investment in gas supply would be devastating:

• Gas for east coast electricity could be interrupted within two years and would run out by 2029;
• Industrial users, including manufacturers in the southeast, would face closure within a decade due to insufficient gas supply and lack of viable alternatives; 
• Western Australia would run out of gas for electricity – which accounts for 60% of the state’s power – from the early-2030s and its mining and industrial sectors would be left without gas from mid-2030s; and, 
• Queensland’s long-term LNG export contracts would be broken and then LNG projects on both the east and west coasts would close prematurely. 

It is sobering to imagine the blackouts; loss of manufacturing jobs; impact of increased sovereign risk on investment in other energy vectors and the worsening balance of trade as LNG export revenues rapidly decline if such a ban was imposed and these impacts played out.

As noted in the Grattan Institute’s Keeping the Lights On report last year, without gas-powered generation, Australia would not be able to support deeper penetration of renewables and our electricity system would become increasingly unstable.

Many commentators have noted that without more gas, avoiding this instability could require more government funding for the extension of aging coal plants, similar to the Eraring extension in 2024, resulting in higher emissions.

Myth 2 – LNG producers send all the gas to export

Australia is a major LNG producer and gas exports represent nearly 20% of Australia’s export revenue¹, underpinning the country's balance of trade and economy.

The gas industry also recognises the imperative for a well-functioning, well-supplied domestic market. We support the 15% domestic gas reservation in WA and Queensland producers have responded to ensure that the east coast market has been fully supplied, even as Victorian production has declined and state government interventions have meant that supplies have not been replaced.

Even without a formal domestic gas reservation, in the 10 years since LNG exports began in Queensland, the Shell QGC LNG project has supplied an average of almost 15% of all available gas produced to the domestic market – equivalent to the WA domgas reservation. Much of this has been sold at a considerable discount to LNG netback prices. 

Queensland gas that was once uneconomic to develop without the scale of LNG projects, now flows to the domestic market. In fact, significantly more gas flows from Queensland to the domestic market now than before the LNG projects were sanctioned.

It’s projects like those in Queensland that are keeping the lights on in cities like this one. 

And let’s talk about the contribution of energy projects to regional Australia. The CSG-LNG industry in Queensland has been a boon for so many communities, creating opportunities outside the densely populated cities where housing affordability is an acute issue.

I recall the reflection by former Minister for Resources Ian MacFarlane, himself a prominent agribusinessman, who said: “what we’ve seen in Queensland is an economic development of a region unsurpassed in my lifetime”.

At Shell QGC alone, in the past 10 years since LNG exports began, we have:

• Contributed almost $2.4 billion to the Queensland Government via royalties, infrastructure and land taxes – which has been used to deliver essential services to all Queenslanders;
• Spent $6.7 billion with Queensland suppliers;
• Provided more than $40 million in community contributions; and
• Negotiated 3,300 landholder agreements, resulting in $370 million in payments to landholders since 2011.

We are not alone in these contributions. 

Australian gas is indeed being produced for Australian consumers, for regional economies and for the ongoing prosperity of the nation.

Myth 3 – Gas producers pay no tax

Opponents of our industry regularly assert that gas producers pay no tax, no royalties and that international producers take their profits offshore so that there is no benefit to Australians.

You might have seen some prominent advertisements to this effect as the election has geared up!

The facts are that our industry paid about $17 billion in tax for the 2023-24 financial year in the form of company income tax, PRRT, royalties and excise. As reported in the most recent ATO Tax Transparency Report, Shell Australia paid $1.6 billion in corporate income tax in FY2023, an amount which is expected to grow after more than a decade of massive capital investment. This material tax contribution helps fund essential services for all Australians.

Beyond the taxes that we pay, according to the recent KPMG Report, commissioned by AEP, our industry makes a $105 billion annual contribution to the economy. It accounts for 3.7% of GDP and supports 215,000 jobs along the gas supply chain, 30,000 of those are directly employed in the industry.

Gas and LNG are critical enablers of the energy transition in Australia and our region

In Shell’s opinion, there is not a single credible energy transition scenario that excludes natural gas.

Now there are think tanks that have produced normative scenarios where the world’s economy is net zero and the energy mix has no natural gas. But they are not realistic pathways as the world stands today.

Gas is needed to firm renewables, it will be increasingly needed as back up as coal exits and let’s not forget it cannot yet be replaced in the production of many essential products or manufacturing processes. Two million customers in Victoria alone rely on gas for cooking and heating their homes.

Shell's Global LNG Outlook Report 2025 forecasts global demand for LNG to rise by around 60% by 2040. This is largely driven by economic growth in Asia, the impact of AI, and efforts to cut emissions in heavy industry and transportation. It shows that demand in Asia is gathering pace with China and India building out regasification infrastructure and planning to add new gas connections to millions of people by 2030.

Australia finds itself in a perverse situation. It is a resources-rich country in which energy and minerals have underscored the nation's prosperity and an enviable quality of life for a century. And it has an incredible opportunity to thrive through the energy transition.

But the reality is, that this is now at risk.

It is increasingly difficult for international investors to allocate the billions of dollars of private capital that are needed to the Australian market.

Energy policy inaction, a quagmire of regulatory approval complexity and retail politics are combining to starve Australia of the international investment it desperately needs.

We have a potent opportunity to meet growing demand, while ensuring Australia’s own competitiveness and regional security, as we face into the 2030s and beyond.

If we as a country don't develop the reserves under our feet, we'll be importing it in greater and greater quantities, while missing the economic opportunities in front of us.

Just under 15 years ago, Queensland and Australia attracted a massive wave of investment that heralded the start of a new CSG-to-LNG industry.

Over that time, close to $100 billion of private investment (much of it, foreign investment) has created a world-class industry in Queensland. It’s delivering enormous economic benefits to Australia, energy security to Australia’s closest trade partners AND significantly increasing the volume of Queensland gas flowing to the domestic market. It was a vote of confidence not just in the subsurface opportunity, but in Australia as a stable and effective investment destination.

At the same time on the west coast, even larger investments were being made to unlock our offshore conventional gas resources.

Today it is a very different picture.

So, what is needed to re-create the investment case for Australia?

For gas, the biggest levers to increase supply lie with the states.

Although belated, it is positive that Victoria and NSW, the two largest gas consuming states, are lifting bans and moratoria on gas exploration and again recognising the importance of developing new gas supplies. Now they need to turn the acknowledgement that they urgently need more gas into tangible actions to support development.

In Queensland, which has traditionally supported gas and resource projects, we're encouraged by the government’s early signals of renewed support for the gas industry. In my view, there are two things the state government could do that would make a material difference:

• Firstly, grasp the opportunity that lies in the newly re-established Resources Cabinet Committee, to drive integrated decision making between Resources, Energy, Environment and Planning portfolios. And utilise the powers of the Coordinator General to steer major energy transition projects whether they be gas, minerals or renewables; and,
• Secondly, streamline and remove duplication in secondary environmental approvals and conditions – in support of better project and environmental outcomes.

And the federal government has a vital role to play too.

The fact that the easiest lever the federal government now has to solve the southern gas problem is export controls is not a reason to pull that lever harder.

This does not increase supply, it simply redistributes it and when coupled with price caps and other market interventions, it can impede investment and exacerbate the challenge.

If there is need for a conversation about more commitments to the domestic market, let’s do so with proper consultation and design a system where all participants and states contribute their share and that protects rather than erodes the investment case for Australian gas.

Rather than redistributing an ever-diminishing pie, let’s make the pie bigger.

Rather than adding more regulation, let’s reform regulations to reduce complexity, drive increased productivity, increased investment and strong environmental outcomes.

As the Productivity Commission has noted, “regulatory processes in the resources sector remain unduly complex, duplicative, lengthy and uncertain”. 

Protection of the environment and ensuring the safety of our operations for our staff and community are non-negotiables. We also believe in the transparent reporting of our domestic gas and LNG export sales.

The regulatory and compliance hurdles we need to clear should be high by all means, but we shouldn’t have to clear hurdles which move, aren’t visible until you hit them and which once you’ve cleared them, spring up again and again.

In short, regulation that is both effective and efficiently administered is required to create an environment conducive to sustained investment over time.

Real vision and a bipartisan approach are needed to get Australia’s energy transition back on track.

Australia can be, traditionally has been, so much more than the sum of its parts; so much more than a collection of states and territories. But right now, it feels like the complexity of multiple layers of regulation is slowing the nation's ability to capitalise on its competitive advantage in the energy transition. Australia’s global ranking as a place to invest is slipping.

It’s time to move forward and this is a great time for a reset. Whatever the makeup of the next federal administration, there is a real opportunity to approach things in a different way. And that will be critical to building the energy system for tomorrow.

Without it, there is a real risk of squandering the opportunities gifted to us in this country.

That can be avoided with a much more joined up approach across whole of government – state and federal.

The Energy and Climate Change Ministerial Council has a prime opportunity to grasp the nettle and take courageous action. In doing so, it could pave the way for a more balanced discourse and sensible pathway. That would include:

• Reinvigorating investment through targeted regulatory reform to remove duplication, complexity and ambiguity, to give certainty to investors and deliver better outcomes for the environment.
• Finding bipartisan solutions because the investments needed for the energy transition will be multi-decade investments that extend through multiple political cycles.
• And embedding a federal coordinator-general to oversee major energy transition projects and remove layers of duplicative approvals processes – the “single front door” established by the Treasurer is a good start, but it needs to be more than a concierge service.

I wonder what this nation’s forebears would make of all of this.

Keen observers of history would note next year is the 125^th anniversary of Australia’s Federation. It will also mark 125 years of Shell’s presence in this great nation, something we are very proud of.

Our business and the products we sell have evolved over that time, but our commitment to making a strong contribution to the national economy and local communities remains steadfast.

We're only a few kilometres from Centennial Park, the site for the proclamation of the Commonwealth of Australia on 1 January, 1901.

While the father of Federation, Sir Henry Parkes didn’t live long enough to witness his dream of a united country come to fruition, it would indeed be a great testament to his legacy if a more cooperative federal approach could be adopted, especially in relation to energy security.

As Parkes’ iconic Tenterfield Oration in 1889, noted:

We say that the time has come when there should be only peace and goodwill and agreement between these great colonies.