Australian PM Albanese under fire on NWS extension approval

Just weeks after winning a second three-year term as Australia’s prime minister on a renewables and green agenda, Albert Albanese is already under fire after Murray Watts, his newly appointed environment minister, granted conditional approval for Woodside Energy’s North West Shelf (NWS) gas project extension until 2070.

The approval caught many off guard and follows a six-year review process that saw delays, court appeals and push-back from numerous Australian environmental groups and activists.

The NWS gas project, offshore Western Australia, is the country’s oldest and largest gas project. More than 6,500 LNG cargoes have been delivered from the project since it became operational in 1989. It continues to deliver gas to both international and domestic markets, providing around 15% of Western Australia’s gas needs.

Woodside Energy is the project operator with a 33.33% stake. Remaining partners BP, Chevron Australia, Japan Australia LNG, and Shell Australia each hold an equal share of the project.

The Western Australia state government cleared the project in December after considering almost 800 appeals from activists and environmental groups, Reuters reported. However, in what appears to have been a political move, the Albanese- led federal government twice delayed making a decision about the extension in the lead-up to general elections in May. Now that he’s been re-elected, Albanese isn’t reticent to dial back on some of his climate change campaign rhetoric, claim opponents.

Climate catastrophe

NWS project extension emissions are projected at 4.3 billion metric tons of carbon emissions over its lifetime, causing even more angst among environmental groups. The project is already Australia’s third-highest emitting facility, producing around 6 million tonnes of greenhouse gases per annum.

The approval also comes as Australia battles with what appears to be climate change-related weather catastrophes. The Melbourne-based Climate Change Council criticized the approval, arguing that it green-lights decades more gas production, “while communities on the NWS mid-north coast mop up after record-breaking floods and South Australian farmers battle devastating drought.”

“It’s not just politically jarring. It’s indefensible,” it added.

The Climate Change Council also claimed that the Albanese-led Labor government has been addressing Australia’s domestic emissions but not the emissions of the country’s fossil fuel exports, “despite clear scientific evidence that all emissions contribute to the climate crisis, no matter where they’re burned.”

Albanese, however, defended his government’s decision, claiming that gas was needed to boost Western Australia’s renewables, with 15% of the gas earmarked for the local market. “In Western Australia, they are closing their last coal-fired power station at Collie in 2027. They are moving to renewables backed by gas, and that will be a really important part of the transition that will occur,” he said.

Notably, a country’s carbon footprint encompasses both its domestic emissions, and the emissions associated with the production and export of fossil fuels. As such, Australia has a global carbon footprint that far exceeds its economic size and population of some 27 million people. The country is responsible for around 4.5% of global fossil carbon dioxide emissions, with 80% of those emissions coming from its fossil fuel exports, a Carbon Analytics report found.

Moreover, how can Australia extend a gas project with extensive carbon emissions when it’s already set a net zero emissions 2050 goal? Given CO2 emissions from gas projects along with methane leaks across the entire gas value chain, it likely won’t meet its 2050 pledge. Ironically, the Australian government’s Department of Industry, Science and Resources agreed. It stated that “Australia cannot reach our 2050 net zero targets without reducing and decarbonising our consumption of natural gas.” 

Awash with gas

Yet, at the end of the day, one of the most prominent take-aways from the government’s NWS gas project approval is that the market might not need the fuel. In its World Energy Outlook 2024, the International Energy Agency said that LNG markets are poised for a challenging decade since surging supply is set to outstrip demand. This will create a supply glut that’s likely to persist well into the 2030s.

New NWS gas will also have to compete with legendary LNG exporter Qatar as it brings its North-field gas project online. New gas from the field will increase the country’s LNG exports to an unprecedented 142 million tonnes per annum (mtpa), an 85% increase from current levels. The Alaska LNG project, if approved, could also export as much as 20 mtpa of LNG. In 2024, the U.S. exported 11.9 bcf/d of LNG, according to the U.S. Energy Information Administration, making it the world’s largest LNG exporter.

Simon Molyneux, managing director/CEO at Perth-based Molyneux Advisors, offered a different take. He told Gas Outlook that the price of Qatari LNG is what usually determines the market, while Canadian and Alaskan LNG will be proximal to north Asian markets and U.S. Gulf coast LNG will be low-cost. But that probably won’t be long-lived, he said, because Tier 1 basins don’t have a multi-decade inventory.

Also, the NWS project will deliver new supply into Asian basins without the transport and political risk that U.S. and Qatari LNG might provide, he added.

“So for Asian buyers I think they would want long-term contracts for NWS (Australian) gas in their portfolio, to mitigate risk and balance supply interruption, but perhaps not a big position because it would increase average portfolio cost,” he concluded.

(Writing by Tim Daiss; editing by Sophie Davies)