16/09/2008 - 12:13

ETS to double operating costs: Woodside

16/09/2008 - 12:13

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Woodside Petroleum Ltd said the introduction of the government's emissions trading scheme will more than double the operating costs of a liquefied natural gas project.

ETS to double operating costs: Woodside

Woodside Petroleum Ltd said the introduction of the government's emissions trading scheme will more than double the operating costs of a liquefied natural gas project.

In a submission on the government's proposed Carbon Pollution Reduction Scheme, Woodside said a price of $20-40 per tonne for carbon emissions in 2010, escalating over time, would increase operating costs by up to 120 per cent for a typical project.

A typical project is a 10 million tonne per annum, two train operation, Woodside said in its submission.

The company added the ETS will also impact a LNG project by reducing after tax cash flow by up to 29 per cent and increased direct government payment by between $1 billion and $2 billion, therefore resulting in an effective tax rate of up to 55 per cent.

"A domestic emissions trading scheme must protect the Australian LNG industry against intense competition while relevant governments negotiate the transition to a world in which emissions from LNG are comparably treated," Woodside said.

"The limited and declining assistance proposed in the Green Paper for eligible EITE (Emission Intensive Trade Exposed) industries further fails to secure the ongoing competitiveness of Australian LNG."

The government has previously said that LNG producers would not qualify for any free emissions permits, prompting an outcry from Woodside and other LNG producers which say Australia is at risk of losing multi-billion projects and consumers could face higher electricity costs.

Woodside is urging the federal government to exclude LNG producers from the proposed ETS, due to start in 2010.

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