For a long time now, the Australian Greens have called on the Government to extend the existing petroleum resource rent tax (PRRT) as a measure to expand revenue by taxing exceptional profits made by the gas sector.

Whilst designed initially to ensure that Australia would get additional revenue when gas exporters make greater profits from what’s essentially our resources, the design of the PRRT has been criticised as being outdated and only delivering modest revenue due to carried-forward tax credits and their ilk.

The industry has in turn said that changes to the PRRT would impact on their return on investment and make committing to future investments that much harder.

A fair point given that companies are meant to deliver returns on their shareholder investments but one that is becoming increasingly harder to justify as domestic gas exporters deliver record profits.

Profits such as the one that Origin Energy (ASX:ORG), one of Australia largest energy providers, has dropped into the laps of its no doubt happy shareholders.

The company noted that for the financial year ended 30 June 2023, it recorded a profit of just over $1bn.

Both its electricity and gas arms recorded significant greater gross profit per unit (megawatt hour and gigajoule respectively) compared to the previous financial year.

Electricity recorded a gross profit of $574m, or $16/MWh a 175.86% increase from $5.80/MWh in FY2022, while the larger gas unit saw gross profit climb from 3379m, or $3/GJ, in FY2022 to $943m, or $5.1/GJ, in FY2023.

Volumes of electricity and gas were practically unchanged, which means that for all intents and purposes, Origin’s gross profit increase can be attributed directly to price increases.

With gas contributing about 62% of the company’s gross profit, that means about $620m of its net profit would be liable for any super profit tax; not the greatest amount but every little bit adds up.

Just a small part of the gas sector

What’s important is that Origin’s share of the gas sector pales in comparison to Woodside, Santos and the multinationals such as Chevron that have set up shop in Australia.

Woodside Energy Group (ASX:WDS), for example, reported a net profit after tax of US$6.5bn ($10.16bn) for the 2022 calendar year, a full order of magnitude higher than Origin’s net profit.

It gets worse when you consider that the Chevron and Woodside operated LNG projects – namely Gorgon, Wheatstone, North West Shelf and Pluto – shipped 56 LNG cargoes totalling 3.9Mt in July 2023, generating revenue of $3.48bn.

Granted that is revenue and not profit, but it provides a hint of how much additional revenue the gas sector could potentially bring if the Greens’ proposed changes are implemented.

That said, Origin’s example still serves as useful microcosm of the broader gas sector, and the picture it is painting is one that has seized on by its critics.

The Australian Council of Trade Unions (ACTU) called the company out on reporting high profits at a time when people were struggling with cost of living pressure – with electricity and gas (for heating and cooking) being major contributors.

“Customers will rightly wonder how these big energy companies can justify such large profits, especially as Origin reports that it is due partly to the cost of purchasing energy for them is fallen, and they have failed to promptly pass on those savings to consumers,” ACTU assistant secretary Joseph Mitchell noted.

There is every likelihood that green groups will not take kindly to Origin’s profit either though their chief voice – the Australian Greens – might be just a little busy fighting to limit rent resources… for now.