Senate Select Committee on the Taxation of Gas Resources opening statement

Thank you, Chair, for the opportunity to make an opening statement.

This year marks Shell’s 125^th year of operations in Australia. We delivered the first bulk shipment of kerosene to Australia on a vessel called the Turbo just two weeks after Federation. That feels particularly poignant right now as Australia seeks to navigate the global fuel supply shock.

Today, Shell Australia is a frontier basin explorer, a major domestic gas supplier, a gas and electricity market participant, a renewables generator and battery operator, and a major integrated gas/LNG producer.

We have been one of the largest investors in Australia over our 125-year history and that scale of investment in Australia continues. Indeed, since 2010 Shell Australia has invested more than US$60 billion of private capital in Australian gas and LNG projects. Put simply, that’s nation‑building scale. This investment reflects long‑term commitment, not short‑term capital.

We employ more than 2200 people directly in Australia and engage a large contractor workforce with specialised skills. We invest in Graduate, Apprenticeship and Training Programs, particularly in regional Australia. We are proud to make strong positive contributions to the communities in which we operate through the creation of jobs, social investment and regional development.

In addition to that US$60 billion of capital investment since 2010, in the last decade Shell has paid around AUD$12 billion in Australian taxes. We have made more than $370 million of payments to landholders in Queensland who host our infrastructure.

The reason why Shell has continued to invest in Australia for 125 years is the great confidence with have had in Australia as a stable, reliable investment destination and the belief that we continue to have in the potential of this country and its people.

I am proud of our contribution we have made and pleased to have the opportunity to appear here today.

There have been many assertions made to this Committee and on social media about the conduct and contribution of the gas industry to our great nation.

The real facts are that:

• The gas industry has invested more than $400 billion in Australia since 2010, paid $21.9 billion in taxes and royalties last year alone and $60 billion in the last three years (making us the second-highest tax paying industry in the nation, according to ATO figures)
• And the gas industry makes an annual contribution to the Australian economy of over $100 billion per annum, according to KPMG.
• After a massive period of capital investment, most offshore gas projects now pay PRRT and Federal Treasury estimates are that gas companies will pay $8.3 billion in PRRT payments over the next five years.
• Other countries, like Norway and Qatar, have designed their fiscal settings fundamentally differently to Australia. They balance a very high share of economic rents against their higher appetite for risk sharing and direct investment of public funds to achieve tax neutrality and support investment. Australia chose a different model, with no risk and no direct investment of public funds.
• The domestic gas market remains well supplied and Australian domestic gas prices have not risen in response to the conflict in the Middle East. Contrary to evidence given to this Committee yesterday, east coast domestic gas prices are currently between AUD$11-12/GJ, which is around half international LNG spot prices, against a marginal cost of production of $7-8/GJ, according to the ACCC.
• Higher international oil and LNG prices will flow through the Australian people through materially higher Corporate Income Tax and PRRT payments.

Two proposals for new taxes have been put before this Committee – a flat 25% tax on LNG export revenues (when no other tax in the country is on revenues) and a 100% windfall profits tax. Both are spectacularly ill-advised and I am happy to expand on the reasons why.

In short, they would make Australia less competitive for global capital, render many new developments un-investible, reduce our energy security and weaken our relationships with key regional trade and defence partners.

And would do so at a time when resilience and reliability are paramount.

I appreciate that the Committee Members will have many questions for me and my colleague Ms Trotter today and we are happy to answer those questions where we can.