Media release: Gas tax proposal would make Australia “uninvestable” and threaten future energy supply, report finds

Imposing an additional 25 per cent tax on Australia’s oil and gas industry would make new projects uninvestable, drive investment offshore and put future energy supply at risk, new analysis from Wood Mackenzie shows. 

The ‘Analysis of proposed LNG export windfall levy: potential impact on energy project economics and fiscal competitiveness’ report finds the additional tax would push effective project tax rates to over 80 per cent and slash project value by up to 94 per cent — destroying Australia’s ability to attract investment in critical new energy supply. 

Australian Energy Producers Chief Executive Samantha McCulloch said the report reaffirmed industry’s warnings that the proposed tax will lead to higher energy costs, increased risk of gas shortfalls, and job losses across industries that depend on reliable and affordable gas supply. 

“At a time of heightened global uncertainty, the priority must be strengthening energy security by encouraging investment in new supply — not imposing new taxes that will leave Australia more exposed to future shocks,” Ms McCulloch said.

“The consequences are clear — less investment, less supply, and higher energy costs for Australian households and businesses.”

The analysis found: 

• Imposing a 25 per cent export levy on LNG would result in an effective project tax rate of up to 83 per cent and erode up to 94 per cent of project value, making projects “uninvestable”. 
• The potential impact on planned FIDs could put up to 20,000 PJ of gas production and $70 billion in government revenue at risk.
• It would make Australia the least fiscally attractive regime among oil and gas jurisdictions, behind Canada, Indonesia, Malaysia, Nigeria, Norway, PNG, Timor-Leste, Qatar and the United States.

The report also points to the experience of the United Kingdom, where the imposition of an “Energy Profits Levy” resulted in a “measurable contraction” in investment activity.

Ms McCulloch said calls for higher taxes ignore the significant contribution the industry already makes to the Australian economy.

“The oil and gas industry is already Australia’s second-largest corporate taxpayer, contributing $21.9 billion in taxes and royalties last year while supporting jobs, regional communities and economic growth,” she said.

“It is no coincidence that the loudest calls for these massive new taxes are coming from those who want to see Australia’s oil and gas industry shut down.”

“At a time of global instability, Australia should be attracting investment in new supply — not driving it away.”

Read the report: https://energyproducers.au/wp-content/uploads/2026/04/Wood-Mackenzie-Analysis-of-Proposed-Windfall-Levy.pdf