No spin: The oil and gas election policies that will affect ASX stocks
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As the major parties switch up the spin cycle ahead of the May 18 federal election, we’ve hunted down the policies that will affect listed companies — so you don’t have to.
Oil and gas aren’t really on the radar of the major parties this election, despite Australian being the second largest LNG exporter in the world after Qatar.
However as one analyst says, business as usual could be a good thing for the possibly recovering small cap sector.
Pitt Street Research founder Stuart Roberts noted last week that Liberal policy is likely to be better for the oil and gas sector, because the current government strategy is maintaining “business as usual”.
Vertium Asset Management chief investment officer Jason Teh says Liberal policy is unlikely “move the dial” too much for small caps, since few companies have exposure to the Northern Territory unconventional gas fields anyway.
But Labor’s gas export trigger could be influential, if taken to the extreme, as the question would be at what price point would they require gas to be reserved for the domestic market, and at what price would LNG exporters be allowed to resume their business?
Labor’s gas export trigger is an extension of the Australia Domestic Gas Security Mechanism (ADGSM), put in place by the Liberal government in mid-2017 and expiring in 2020 to protect again east coast gas shortages.
It requires the three LNG producers in Gladstone, Queensland to limit exports or find new gas sources for the domestic market if the resources minister deems there to be a local shortage.
In September last year, Labor said it would make the ADGSM permanent and able to be used when gas prices are too high, not just when a gas shortfall is forecast.
Details, such as how high those prices would have to be, have not been disclosed, according to a spokesperson for shadow energy and climate change minister Mark Butler.
Labor also plans to alter the Coalition’s $5bn Northern Australia Infrastructure Facility (NAIF), which is a key funder of pumped hydro, solar and wind farmer Genex Energy (ASX:GNX).
Labor wants to give it a new name — the Northern Australia Development Fund — and use $1.5bn purely for pipeline infrastructure projects.
Specifically they’re looking at pipelines to better move gas in Queensland’s Galilee and Bowen basins to the east coast, and from the thus-far barely explored Beetaloo unconventional gas basin in the Northern Territory to Darwin and the east.
Labor leader Bill Shorten also pledged to establish national fuel reserves that meet or exceed the international 90-day supply standard, and build tank storage farms.
There are only four oil refineries in Australia: BP’s at Kwinana near Perth, Caltex’s Lytton refinery near Brisbane, and Viva Energy’s and ExxonMobil’s sites near Melbourne.
This could have a positive impact on the small number of oil producing small caps which include Triangle Energy (ASX:TEG) and Buru Energy (ASX:BRU).
The Liberals want to support opening the massive Beetaloo gas field in the Northern Territory for the east coast market by spending $8.4m on a feasibility study, environmental work, and an Aboriginal economic strategy.
Changes to the NT’s fracking policy last year opened shale exploration up, but it’s been slow going — Origin has two wells planned for this year for the Beetaloo but not much else is happening yet.
It has also promised to underwrite some major energy generation projects in order to bring down wholesale power prices, and has a shortlist of 12. Five of these projects are gas generation.
The five projects were submitted by five large local or global private companies and consortiums.