Gas tax would burn new projects

A price cap or new tax on gas could lead to longer-term shortages and continued high prices, Woodside Energy chief executive Meg O'Neill has warned.

Predictions in the recent federal budget of a more than 50 per cent rise in the cost of power on Australia's east coast over the next two years have sparked heated debate about potential interventions.

The federal government has said it will consider changing the Petroleum Resources Rent Tax to take more cash from producers, or a price cap on gas.

“That type of market intervention would have serious long term consequences,” Ms O'Neill said at The West Australian’s Leadership Matters event this morning.

The moves would make price pressures worse in future by restricting new supply, she said.

Talk of intervention has also reportedly led to gas buyers walking away from deals, as big customers wait for the government to step in to drop prices.

Capping prices would hit the economics of new supply sources, and change incentives for demand reduction.

But the government is considering the move to ease potential pain on consumers and big users, like manufacturers.

Ms O'Neill said Woodside’s all-in tax rate, including company tax and royalties, was 47 per cent in the most recent financial year.

When asked what she would say to concerns the company was delivering record profits, Ms O'Neill said critics should look at Woodside’s annual report from two years ago, when it reported a record loss.

Oil and gas was a cyclical industry, she said.

And stability in the tax and regulatory regime would be crucial to bring new investments online supplying new gas.

The Scarborough and Pluto Train 2 development would cost $18 billion, and would be needed to improve global energy security while countries transition away from carbon emissions.

WA had been less severely impacted by price pressures than the east coast because of natural advantages and stable policy,” Ms O'Neill said.

“It’s absolutely critical this remains the case,” she said.