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[https://rogermontgomery.com/australias-gas-crisis-rich-in-resources-but-struggling-with-energy-costs/\](https://rogermontgomery.com/australias-gas-crisis-rich-in-resources-but-struggling-with-energy-costs/)

**Resource ownership and lost revenue**

Australia’s gas resources are publicly owned, with state and territory governments managing them on behalf of citizens. The Northern Territory Government defines petroleum royalties as *“payments made to the Territory as the owner of the resources,”* while Western Australia views royalties as *“a purchase price for the resource,”* emphasising that *“the community expects a fair return for the loss of its non-renewable petroleum resources.”.*

In practice, however, a significant portion of Australia’s gas is exported without royalties, particularly from offshore fields in Commonwealth waters, including major projects like Chevron’s Gorgon and Wheatstone, Shell’s Prelude Floating LNG, and Woodside’s Pluto. In 2022-23, when LNG prices soared due to global energy market chaos, the industry paid just A$2.8 billion in royalties on A$71 billion in exports – a mere 3.8 per cent of the total value, according to the Australian Energy Statistics 2023.

And while these operators pay little in royalties, they appear to pay even less in tax. In fact, the Australian Taxation Office has labelled the oil and gas industry a *“systemic non-payer*” of tax.

In 2020-21, major LNG exporters – Woodside, Exxon, Shell, Chevron, INPEX, and APLNG – enjoyed record prices, which drove their income to A$56.3 billion. They paid just A$454 million in company tax, a rate of 0.8 per cent, thanks to tax credits accumulated under current rules.

Over the last four years, Australia’s LNG exports totalled A$265 billion, with A$149 billion royalty-free, including all LNG exports from the Northern Territory and those from four of five facilities in Western Australia. A 20 per cent royalty on these exports could have generated A$53 billion for public coffers.

International comparisons highlight the absurdity of Australia’s shortfall. Qatar, producing 50 per cent more oil and gas than Australia, generates six times more government revenue from its industry. Norway, which exports more oil and less gas, earned an estimated A$127 billion in tax revenue from its oil and gas sector in 2023 alone.

These nations utilise resource wealth to fund strong public services or sovereign wealth funds, whereas Australia’s healthcare, education, and childcare systems face significant underfunding and the country’s quality of life declines. Some estimates suggest that teachers collectively pay more in income tax than the entire gas industry, highlighting the inequity in the distribution of resource wealth.

The forgone revenue from royalty-free exports and minimal taxation could transform Australia’s public services. A sovereign wealth fund, like Norway’s, could ensure long-term prosperity, or direct investments could enhance schools, hospitals, police forces, and infrastructure, raising living standards. Instead, the current system enriches a handful of corporations and individuals while leaving consumers and small businesses to bear record-high energy costs.

**Potential solutions**

Addressing Australia’s gas dilemma requires reforms to prioritise domestic needs and ensure fair compensation for public resources.

One proposed solution is a WA-like national domestic gas reservation policy, as pledged by the federal opposition, which would have diverted 50–100 petajoules of gas from exports to the domestic market if implemented. Macks Advisory suggests a more comprehensive approach: a coast-to-coast 15 per cent domestic reservation policy paired with a 100 per cent tax on export sales above A$7/gigajoule. This, Macks Advisory argue, could stabilise domestic prices at A$7/gigajoule while generating A$10 billion in treasury revenue.

Western Australia’s experience demonstrates the viability of such policies. Despite initial industry objections and threats to relocate multibillion-dollar projects, Western Australia’s gas sector has thrived, and its consumers have enjoyed stable prices, even during global market shocks like the 2022 Russia-Ukraine conflict.

Others suggest another option is redirecting uncontracted LNG spot sales to the domestic market. Evidently there is sufficient uncontracted gas available to alleviate forecast shortages, and this approach could avoid disrupting long-term export contracts while addressing imminent forecast supply gaps and mitigating the need for imports.

Infrastructure investments to connect Queensland’s gas fields to NSW and Victoria could also reduce reliance on imports, offering a more sustainable alternative to spending billions on LNG import terminals.

In extreme scenarios, why not advocate for federal intervention, such as declaring a national emergency or invoking force majeure to renegotiate export contracts and rewrite industry rules. This would prioritise domestic supply and ensure operators pay a fair price for extracting resources that belong to the commonwealth (all of us). However, such measures would likely face significant industry pushback, with groups like the Australian Energy Producers arguing that policy changes could deter investment and jeopardize energy security.

Western Australia’s experience however counters this narrative, showing that balanced policies can support both industry growth and domestic needs.

**A path forward**

Australia’s gas wealth is a double-edged sword. As a global LNG leader, Australia could generate substantial export revenue. Instead domestic consumers face soaring energy costs, and public revenue from royalties and taxes falls far short of its potential.

A decade of policy failures, regulatory delays, and a lack of foresight has created a paradox where Australia may import its own gas to meet demand. By learning from Western Australia’s domestic reservation policy and international models like Norway and China where the Chinese Communist Party (CCP) co-owns all operators, Australia could secure affordable energy for its citizens, fund world-class public services, and manage environmental concerns.

The solutions – whether through reservation policies, redirecting spot sales, or infrastructure investments – require cooperation between state and federal governments, as well as a commitment to balancing economic, environmental, and social priorities. You would think with the ALP fronting both state and federal governments, co-operation wouldn’t be an issue.

With a thoughtful approach to its resource management, Australia could ensure that its gas wealth benefits all Australians, not just a select few corporations and individual billionaires.

Lotto extension was in the works months before laws allowed it

projects like Chevron’s Gorgon and Wheatstone, Shell’s Prelude Floating LNG, and Woodside’s Pluto. In 2022-23, when LNG prices soared due to global energy market chaos, the industry paid just A$2.8 billion in royalties on A$71 billion in exports – a mere 3.8 per cent of the total value.

If we are unable to tax our foreign owned resources. Why cant Australia start our own Resource Conglomerate. We have the know how! We have the capital base! Australia is the world's third-largest exporter of fossil fuels, following Russia and Saudi Arabia.