The Narrabri gas project is closer than ever to getting under way, with Santos saying it needs just two more approvals before it can “press the go button”.
Speaking at The Australian’s Energy Nation Forum in Sydney on Wednesday, 23 September, Santos CEO Kevin Gallagher said only Native Title and a pipeline licence from the NSW Government now stood in the way.
“All we need now is that Native Title to the project, and then the pipeline license from the New South Wales government, and we’re ready to press the go button,” said Santos CEO Kevin Gallagher.
Mr Gallagher said the project’s gas would go entirely to Australian users, but warned a proposed federal gas reservation scheme could affect it if it pushed prices too low.
“But of course, what I would say is, it’s a domestic-only project,” he said.
“We’ve committed 100% of that gas to the domestic market, so the impacts of the domestic gas policy changes could have an impact on our ability to do that project if it drove the price of gas down below the price required to justify investment.”
Mr Gallagher made similar comments to the National Press Club earlier this month, when he also made clear that the booming renewables development has not reduced demand for older energy sources such as coal and gas.
“The world can add enormous amounts of renewable energy and continue to consume enormous amounts of oil and gas because the energy system is far more complicated than electricity generation alone.”
Opponents of the project have seized on Mr Gallgher’s comments at the forum about pricing in a last-ditch bid to stop it.
Lock the Gate Alliance claims the remarks show Narrabri depends on high gas prices, and has called on the NSW Government to withdraw its support.
“Kevin Gallagher has finally come clean and admitted publicly that the Narrabri gasfield can only go ahead if gas prices stay high, but that’s not what the country needs,” said Lock the Gate spokesperson Harriet Kater.
“Painfully high gas prices are a wrecking ball for NSW manufacturing and also drive up household energy bills.”
“The Narrabri gas project has faced opposition from farmers, Gomeroi people and NSW residents for more than a decade – it’s the most highly contested project in our state’s planning history,” Ms Kater said.
“It’s time for the Minns government to back the community and ditch its support for Narrabri gas.”
Santos says they remain committed to Narrabri.
“Santos has consistently committed to developing the Narrabri Gas Project, which would be 100% committed to the domestic market and meet around half of the gas supply needs of NSW,” a spokesperson said.
“As Santos CEO Kevin Gallagher noted, the domestic gas reservation policy in its current form risks crowding out domestic gas projects if it becomes uneconomic to develop them, and Narrabri is the only solution that could sustainably provide affordable, reliable gas to the east coast market in the coming decades.”
At the forum, Mr Gallagher said the issue was simply whether any project could earn a return.
“What I’m saying is that you would need a price setting for any investment to justify investment, so you get a return on that investment, depending on how it all shakes out,” Mr Gallagher said.
“If that was to make the project not economic, then you wouldn’t. I wouldn’t ask my investors to invest in it.”
The federal Domestic Gas Reservation Scheme was released as a draft in May. Under the draft, LNG exporters would need approval to export from 1 July 2027, and ministers could require them to supply the equivalent of 20 per cent of exported volumes to the domestic market.
Santos set out its concerns more fully in a July submission to the federal government’s consultation on the scheme.
Citing ACCC figures, Santos stated average contracted gas prices of $13 to $15 a gigajoule broadly reflected the cost of bringing new supply to market on the east coast.
It wrote that if the scheme drove prices below that level, domestic projects, “potentially including Santos’s Narrabri project in NSW, which is 100 per cent committed to the domestic market, would be crowded out.”
The company argued projects like Narrabri, where all supply has already been promised to Australian users, “must not be prejudiced.”
Santos says it is not against reserving gas for Australians. Its submission states the company has called for a forward-looking reservation policy, one that applies to new projects before investment decisions are made, since at least 2018.
Its objection is to the current draft, which it says would apply to existing export contracts.
“Domestic gas reservation can work – but only if it is genuinely prospective and linked to investment in ongoing and new gas production when and where it is needed,” Santos wrote.
“This proposal fails on both counts.”
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