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Exxon is no longer worried about the future of its natural gas operations in Australia after the Albanese government imposed restrictions on gas prices late last year to prevent them from rising too high.
The Albanese government announced caps on the price of natural gas and coal in December 2022. The price of natural gas will be capped at $8.15 (A$12) per gigajoule and at $85 (A$125) per ton of coal and the cap will be in effect for a year.
"Extraordinary times call for extraordinary measures, and we know, with the Russian invasion of Ukraine, what we've seen is a massive increase in global energy prices," Albanese told media in December.
Criticism from the energy industry was quick. “A policy of such significance, proposed without any meaningful consultation with industry, creates an environment of uncertainty that will result in investment activity dropping across energy markets. This will make solving the underlying structural problems in the energy market harder, not easier,” Woodside said in a statement soon after the announcement was made.
Another energy major in the region, Senex, announced it would suspend an investment project planned for the Surat Basin in Queensland after the caps.
Four months later, the Albanese government said it would extend the price caps until July 2025 to make sure Australians have gas at ‘reasonable prices”. Small producers of natural gas have been granted an exemption as long as they supply their output to the local market.
At the time the cap was introduced, Exxon was among the most vocal critics, calling the decision “reckless free-market intervention”, the Western Australian recalls. Since then, however, the government has been in discussions with energy majors on the new code of conduct for the industry in the new circumstances. According to an Exxon executive, these have been encouraging and “uncertainty is beginning to resolve”.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com