Australia’s oil and gas sector is reportedly seeking special treatment from the Federal Government with its peak lobby’s submission to the review of a safeguard mechanism which governs the largest emitters calling for what’s essentially a free pass.

In its submission, the Australian Petroleum Production and Exploration Association (APPEA) said that while the sector is “firmly committed” to investing in technology, reducing emissions and achieving net zero, the safeguard mechanism should support the new climate targets “at the lowest possible cost”.

APPEA claimed that liquefied natural gas is not only Australia’s second largest export after iron ore, it also plays a role in reducing emissions by displacing dirtier forms of energy in Asia.

While there are some (and diminishing) merits to its argument, maintaining the status quo also goes entirely the whole point of reviewing the safeguard mechanism in the first place, which is to address its shortcomings.

These are the same shortcomings that has seen minimal emissions reductions from the vast majority of the largest emitters covered by the mechanism since 2016 – a concerning point given that they collectively account for 28% of Australia’s total greenhouse gas emissions.

Claims by the industry notwithstanding, applying the same standards for all facilities covered by the safeguard mechanism will provide real impetus for emissions reduction – probably more so than any voluntary moves.

Gas downs and ups

APPEA’s submission comes amidst some bad news for the sector with Santos having its approvals for carrying out certain drilling and completion activities for its Barossa gas project getting overturned by the Federal Court.

While the news is certainly a blow for the company, which is seeking to boost gas supplies to its Darwin LNG project, it was greeted with much joy by environmental groups wary of the project’s high CO2 content.

Meanwhile, Origin Energy has stepped away from the controversial Beetaloo Basin, selling its 77.5% stake in its joint venture to Tamboran Resources.

Company chief executive Frank Calabria told Reuters last week that developing the shale gas resources in the Basin would be more capital intensive over time – a common criticism of the Beetaloo Basin by its detractors.

While the gas sector and the previous Federal Government had hyped up the Beetaloo as one (if not the chief) answer to meet the expected Australian East Coast gas supply deficit, its position as a fairly isolated, greenfields play means that plenty of infrastructure, exploration and development would be required to get the gas flowing into markets.

All this is neither cheap nor timely, meaning that gas from the Basin will likely only start flowing several years after any potential deficit starts making its presence felt. And even then, said cost of gas is likely only going to prevent East Coast prices from going the same way European prices have gone this year.

Not that these drawbacks will hold the industry back from developing the Beetaloo if the demand warrants it.

It is not all negative though with South Korea’s Posco International moving to invest $300m in its subsidiary Senex Energy to triple its natural gas production in Australia to 60 petajoules per annum by 2025.

But the giant conglomerate is also looking to the future with plans start building a solar photovoltaic power generation demonstration plant that will power green hydrogen production in collaboration with CS Energy.

This (and its green steel initiatives) is a clear sign that Posco is aware which way the wind is blowing and is taking steps to ensure that it continues to stay ahead of the pack