Australia is missing out on future earnings from its resources sector, Santos chief executive Kevin Gallagher said, urging the government rethink its regulatory and taxation regime in the wake of the US-Iran war and growing concerns about energy security in Asia.
While Canada is striking ahead with plans to develop a west coast LNG sector targeting Asia-Pacific importers, Australia is now perceived by investors in Tokyo, Seoul and Kuala Lumpur as a riskier investment destination, Gallagher told the National Press Club in Canberra on 9 September.
Four priority LNG projects are being developed in Canada as the country pivots towards Asia: the under-construction 3.3mn t/yr Cedar LNG and 2.1mn t/yr Woodfibre LNG, and the proposed 14mn t/yr LNG Canada phase 2 expansion and 12mn t/yr Ksi Lisims LNG, both of which are awaiting final investment decisions. Canada's first-ever LNG terminal, the 14mn t/yr LNG Canada Phase 1, began exports in July 2025.
Gallagher criticised what he described as a public debate that too often focuses on blaming gas businesses for Australia's rising power prices or suggesting that major export industries such as LNG should be replaced by alternative sectors.
In a wide-ranging speech, Gallagher said Australia's comparative advantage in resources, which accounts for two-thirds of national merchandise exports, should not be abandoned in the push for new critical minerals processing and renewable energy sectors.
Gas supplies plentiful
Data from Australia's energy market operator show the market remains well supplied through 2030, but also warn that new supply will be needed because of declining investment, Gallagher said. He blamed delays to the development of the Beetaloo subbasin and Narrabri projects on drilling moratoriums and other policy constraints from government.
The Beetaloo could be a transformational region for Australia's economic future, but access to LNG markets is needed to make such developments financially viable, he said. A prospective reservation should be instituted to ensure Beetaloo meets domestic and LNG markets.
LNG export joint ventures include multiple Asian partners that rely on Australia for energy security, meaning certainty and reliability are paramount to maintaining regional stability, Gallagher said.
Setting annual rates of supply and conditions under Canberra's proposed domestic supply obligation would be like setting a new tax rate every year — no-one could invest on that basis, Gallagher said. A reservation policy must not oversupply the market and thereby remove the price signals needed to stimulate new investment.
Santos believes a Western Australia-style model where gas volumes must be offered to domestic customers on commercial terms should instead be instituted.
A draft of the proposed DSO laws is expected to be released by the government this month ahead of enforcement from 1 July next year.
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