Shares of Australian LNG producers rose on May 8 after the government adopted more favorable-than-expected changes to petroleum tax, ensuring the load was shared across the industry and did not impact growth projects.
Woodside Energy Group Ltd., the country's biggest independent oil and gas producer, was trading 2.5% higher, while closest rival Santos Ltd. was up 1.5% as at 0249 GMT. Beach Energy Ltd. jumped 2.5%.
Over the weekend, Australia announced plans to change its Petroleum Resource Rent Tax (PRRT) to increase the tax paid by the offshore LNG industry, moves that should increase revenue by A$2.4 billion ($1.6 billion) over the next four fiscal years.
Treasurer Jim Chalmers said reviews found that aspects of the PRRT were better suited to oil projects than LNG projects, and the deductions cap and other changes would help address that.
"The deductions cap seems to have struck a good balance between sharing the load across industry, earning more cash tax for government, and not threatening economics of growth projects," analysts at Citi wrote in a note.
"The deductions cap only starts when a project has been producing for 7 years, so that the IRR (internal rate of return) of new projects isn't materially compromised, which is a relief for Browse and Scarborough."
Woodside's $12 billion Scarborough development is expected to start producing LNG only in 2026. The Browse project, estimated to cost $20.5 billion, is Australia's largest untapped gas resource.
"We will continue to engage constructively with the government on ways to support a functioning market and a positive investment climate for industry to deliver the energy Australians need," a Woodside spokesperson said.
Citi said this would likely be the last change to PRRT before the legislation expires in April 2026, when it may require an overhaul.
Recommended Reading
Ithaca Energy to Buy Eni's UK Assets in $938MM North Sea Deal
2024-04-23 - Eni, one of Italy's biggest energy companies, will transfer its U.K. business in exchange for 38.5% of Ithaca's share capital, while the existing Ithaca Energy shareholders will own the remaining 61.5% of the combined group.
Triangle Energy, JV Set to Drill in North Perth Basin
2024-04-18 - The Booth-1 prospect is planned to be the first well in the joint venture’s —Triangle Energy, Strike Energy and New Zealand Oil and Gas — upcoming drilling campaign.
EIG’s MidOcean Closes Purchase of 20% Stake in Peru LNG
2024-04-23 - MidOcean Energy’s deal for SK Earthon’s Peru LNG follows a March deal to purchase Tokyo Gas’ LNG interests in Australia.
Equinor Acquires Stake in Standard Lithium Smackover Projects
2024-05-08 - Equinor’s transaction, completed effective May 7, includes interests in Standard Lithium’s flagship South West Arkansas Project and East Texas properties.
Crescent Point Divests Non-core Saskatchewan Assets to Saturn Oil & Gas
2024-05-07 - Crescent Point Energy is divesting non-core assets to boost its portfolio for long-term sustainability and repay debt.