AUSTRALIA’S proposed emission trading scheme could jeopardize the viability of two of the North-West Shelf’s biggest gas projects, oil giant Chevron says.
Chevron Australia managing director Roy Krzywosinski said today that under one of the scenarios proposed by government climate change adviser Ross Garnaut, the operating costs of the Gorgon and Wheatstone projects could increase by up to $400 million a year.
He said Chevron had invested $25 billion in the North West Shelf Venture so far, and that the Gorgon and Wheatstone projects would require investments of around $1 billion a year.
Mr Krzywosinski told the Asia Pacific Oil and Gas Conference and Exhibition (APOGCE) in Perth that he agreed with a goal of reducing global emissions, but climate change policies should “have a broad and equitable treatment of all industries”.
He said the current Australian government model on emission trading penalised the LNG industry, despite it being in the government’s interest to protect it.
“Using a hypothesised emission price of $20 a tonne over the life of a project, this result could very well increase the operating costs of the Gorgon and Wheatstone projects by $100 million, to $200 million each per year”, Mr Krzywosinski said.
“This is an additional cost that could put the viability of these massive investments in jeopardy.”
He said a well designed ETS should encourage and support industries such as LNG that make “a net positive contribution to a lower carbon world”.
“We have a lot at stake in Australia,” Mr Krzywosinski said.
“We must take the time to get the design of an emission trading scheme “right” or the economic hurdle may put final investment decisions on major projects, such as the Gorgon and Wheatstone projects, in jeopardy.
“And we know that this is not the consequence that anyone is looking for.”
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