Transcript: Samantha McCulloch on Sky News with Chris Kenny – Victoria’s plan to import LNG

Australian Energy Producers Chief Executive Samantha McCulloch on Sky News with Chris Kenny discussing the Victorian Government’s proposal for the Commonwealth to underwrite gas import terminals in Victoria instead of developing the state’s own gas resources. 

Chris Kenny: More energy madness out of Victoria now, with that state looking to build liquid natural gas (LNG) terminals to import gas into the state, possibly from elsewhere in Australia, despite, of course, Australia being one of the world’s largest gas exporters and Victoria sitting on loads of the stuff. Let’s bring in Samantha McCulloch. She’s with the Australian Energy Producers, she’s the CEO joining me from Canberra. Samantha, this story just stood out to me as a stark example of the madness afoot in this country, because we know there are bountiful gas reserves right across Victoria, on the coast and under the land as well. Yet Victoria won’t exploit any of that. They’re looking to somehow waste billions of dollars trying to import it.

Samantha McCulloch: Hi, Chris. Yes, you’re absolutely right and it does seem like such an absurd situation, doesn’t it? Australia has been blessed with abundant gas resources – we’re a gas-rich nation, we have plenty of gas, and to be contemplating importing gas into Victoria is really an example of a spectacular policy failure.

CK: The bottom line is, even if you can make this work, say we were liquefying gas from the North West Shelf and then shipping it around to Victoria, then offloading it there and turning it back into gas, with all the transport and processing costs, and building the infrastructure to bring it on board, of course that’s going to increase the cost, isn’t it?

SM: The ACCC has already pointed to this in its most recent report, highlighting that imported LNG is likely to be at higher cost for consumers. It provides a direct linkage into the international market, making the domestic market more vulnerable to global developments and any price volatility that we might see in global markets. And of course, when you are liquefying LNG, this is a process that requires far more handling, and you need to freeze that gas to temperatures of minus 160 degrees. That is an energy intensive process that adds costs. It would be far more cost-effective to be developing the gas that’s under our feet in Victoria and ensuring that gas is available to Victorian households and manufacturers.

CK: Through my childhood and early adult life, of course, Victoria was always the manufacturing hub of Australia, and that was because of its cheap energy, with its brown coal and its bountiful gas from the Bass Strait. Now, just confirm for me, everything I’ve read on this is there is absolutely no doubt that in the waters off Victoria and indeed, on the land across Southeast Australia, there is plentiful gas there, right? It is only government bans that are stopping people exploiting it.

SM: What we’re seeing in the Gippsland basin is those mature fields that have been producing for decades now, they are in decline, and we’ve known about this for some time. That is why it’s so critical we can go and explore and develop new sources of gas. But in Victoria, what have we seen? We’ve had a decade of bans and moratoriums on gas exploration and development. We’ve got a government that’s been demonising gas, that’s told the gas industry its investment is not welcome, and now we’re at the point where they’ve been so effective in blocking gas development that Victorians will need to rely on imported LNG. And now we’ve seen the reports today where the Victorian Government is now asking Commonwealth taxpayers to underwrite these facilities. At no point are they looking at focusing on what would be a sustainable, long-term solution to gas supply, which is investing in the development of their own gas resources.

CK: Spot on, Samantha, it’s just unbelievable. Thanks for explaining that.