Darwin
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Introduction: A remarkable year for LNG
Good morning ladies and gentlemen.
It is good to be back in Darwin for this year’s South East Asia Australia Offshore Conference following what have been a truly remarkable twelve months for the industry.
During this time government, regulators and industry have all made tangible progress in improving safety in the offshore petroleum industry – the issue which was the focus of my remarks to you last year, and to which I will return in a moment.
We’ve also seen final investment decisions taken on no less than five liquefied natural gas (LNG) projects, including:
- three projects onshore establishing a whole new coal seam gas to LNG industry on the east coast;
- Prelude, which is on track to be the world’s first floating LNG facility; and
- just last week the Wheatstone project, which at $29 billion, is the second-largest investment in the Australian resources sector - Gorgon being the largest.
Total committed capital expenditure in the LNG sector (including Pluto and Gorgon) is now over $140 billion.
This is an extraordinary level of new investment over a short period of time.
Together these projects will add more than 50 million tonnes of LNG capacity to our existing 20 million tonnes out of the North West Shelf and Darwin LNG projects.
They’ll take Australia from being a regional hub to a global leader in LNG with export volumes second only to Qatar.
They are underpinned by long-term supply contracts and in some cases equity stakes from many of our highly valued trading partners and neighbours in the Asia Pacific.
We welcome the strength this adds to those longstanding relationships.
Northern Australia
And there is more to come.
Darwin and the Northern Territory are positioned to be at the centre of much of the industry’s future growth.
While LNG tankers are frequent visitors to Darwin Harbour these days I understand that the visit last month by Energy Horizon, the largest ever ship to visit the Port of Darwin, caused some excitement.
She is a visual manifestation of the growth in this industry.
Of course all eyes are now on INPEX with everyone eagerly awaiting a final decision on the Ichthys project, which is expected in coming months.
I understand Sean Kildare is providing an update on the project later today.
But can I say that I agree with the Chief Minister that a Joint Venture decision to proceed with Ichthys would be a game changer for Darwin.
I also congratulate the Northern Territory Government for recognising the potential of floating LNG and for Darwin to be at the centre of support for what will be a growing segment of the LNG industry in Australia.
LNG Outlook
Australia is in a global sweet spot for the expansion of the LNG industry.
There are additional projects and expansion trains moving ahead – further proof that Australia remains a stable and competitive place in which to invest and create wealth.
Last financial year, the value of Australia’s LNG exports topped $10 billion.
That’s a remarkable increase of nearly 35 per cent on the year before.
And the Bureau of Resources and Energy Economics forecasts even higher earnings this year.
Globally over the next 20 years, the increase in demand for natural gas is predicted to be higher than demand growth for any other energy resource.
Gas is important for energy security and it offers cleaner energy on a regional scale too - emitting roughly half the carbon per unit of electricity compared with coal.
Australia is in the right region, at the right time, with the right product.
As the ANZ Bank made clear recently, the current boom is “not the stuff of a routine commodities boom”.
There’s something more fundamental going on – a process that will see billions more people achieve middle-class living standards, and one that potentially has decades to run.
Australia is playing its part in supporting this growth, with so much of it centred as it is in our region.
The ongoing demand for our mineral and energy commodities was made clear to me in the course of my recent visits to China, Japan, Korea, Indonesia, Brunei and Taiwan.
Industry recognises this – as evidenced by the record pipeline of investment in Australia’s resource and energy sectors.
Supporting Growth
And so too does Government.
Government has an important role to play in supporting these major projects and helping to ensure their benefits extend economy-wide.
This goes to investments in infrastructure and measures to support Australian content by helping Australian businesses become more competitive and access the right opportunities.
Protectionism is not the answer.
Instead, we are putting in place policies and programs to manage growth pressures, chief among which is the need for more workers, both skilled and semi-skilled.
The Government recognises that in the short term companies need ready access to labour to get projects off the ground.
For this reason we are introducing special Enterprise Migration Agreements for mega projects, in addition to existing migration arrangements.
The guidelines for this program have been released and eligible projects can now begin the process of negotiating an agreement.
At the same time the Government is absolutely focussed on supporting the training and skilling of more Australians with $3 billion allocated to this in this year’s budget.
The LNG sector, and the resources and energy industries more broadly, offer a wealth of career opportunities for Australians.
The projects under construction have operational lives that span decades, so training people today is very much an investment in the future.
Our National Resources Sector Workforce Strategy will, among other things, fund more national apprenticeships and improve the retention of qualified engineers and geoscientists.
We are encouraging better links between education and the resources sector.
Workforce participation is a priority and we are creating a Women in Resources facilitator.
We are also looking at improving the mobility of our workforce with the recently announced expansion of the Fly-in Fly-out Coordinator pilot.
And it is absolutely vital that we do not overlook Indigenous Australians when looking to develop skills and a motivated workforce in the resources sector.
I would like to congratulate INPEX and Total for working with Indigenous groups such as the Larrakia Development Corporation to commence the process of building skills, creating opportunities and engaging respectfully with Traditional Owners.
This is not just happening in Darwin but in other projects such as Browse LNG where companies and the State Government have reached agreement with Traditional Owners and their representatives.
I understand that these agreements are subject to sometimes tough negotiations but we must always remember they are delivering great opportunities for Indigenous Australians to develop skills and business opportunities.
I would like to again emphasise this concept of respect for Traditional Owners who have taken difficult decisions to balance development and change on their country with opportunities to lift their communities out of welfare dependence and poverty.
Some of the behaviours and actions that we have seen in Broome and on the road to James Price Point have been absolutely unacceptable and completely lacking in the respect that is so clearly due.
There will always be a right to peaceful protest but there is no place for racial vilification in Australia and I condemn those that have engaged in this basest of behaviour.
The concept of self-determination requires us - all of us - to respect the lawfully determined wishes of traditional owners whatever they may be.
Conclusion: A final word on Safety
Ladies and gentlemen, in conclusion I turn to the all important question of safety.
As I said at the outset there has been real progress this year toward strengthening safety outcomes in the industry.
In August the Government hosted a very successful International Offshore Petroleum Regulators and Operators Summit as part of the process of consolidating and applying lessons learnt from Montara and Macondo.
Over 400 delegates represented government, regulators, operators and industry professionals.
They came from the Americas, Europe, Indonesia, PNG, Timor Leste, China, New Zealand and Singapore.
And the information exchanged will go toward building a safer industry internationally.
At the Summit the Australian Government, Regulator and Industry agreed an Action Plan to help with the twin goals of protecting lives and preserving the marine environment.
Industry also pledged leadership and accountability on strategic safety priorities, and to create an Australian capping and containment solution.
For our part, the Australian Government continues to implement our response to Montara.
The passage last month of legislation through the Senate to enable the establishment of NOPSEMA - the National Offshore Petroleum Safety and Environmental Management Authority - was an important milestone in this regard.
Also of importance is our continued work with PTTEP Australasia in accordance with the Deed of Agreement between the Government and PTTEP under which PTTEP has agreed to address the systemic shortcomings identified by the Montara Enquiry.
The successful implementation of the monitoring provisions of the Deed -which covers all of PTTEP’s operations in Australia – not just Montara – is reassuring me of PTTEP’s ongoing commitment to, and the effectiveness of, their Action Plan.
The Government and PTTEP will continue this arrangement, and in the process gain valuable knowledge and experience that I am confident will have a positive influence on corporate culture resulting in wider benefits across other operations in the future.
In closing, I wish you a successful conference and invite all those with a stake in our prosperity to embrace the opportunities currently on offer – especially in LNG.
These are exciting times and I encourage you to make the most of them.
Thank you