Turnbull government called on to explain where Australia's offshore gas wealth is going

Turnbull government called on to explain where Australia's offshore gas wealth is going

It's a story of two resource-rich countries with two very different ways of harnessing the wealth they are blessed with.

By 2021 Australia will eclipse the Persian Gulf state of Qatar to become the world's biggest exporter of liquefied natural gas.

In that year, when both countries are forecast to pump and ship roughly 100 billion cubic metres of LNG each, Qatar's government will receive $26.6 billion in royalties from the multinational companies exploiting its offshore gasfields.

According to Treasury estimates, Australia will receive just $800 million for the same volume of gas leaving its shores.

 

Reminded me of this..

Too Much Luck: The Mining Boom and Australia's Future

Author: Paul Cleary

Is it possible for anyone to have too much luck? You wouldn't think so, yet Paul Cleary believes that while Australia is often described as the lucky country, what we have is dumb luck, too much luck, more than we know what to do with.

"Too Much Luck" is the title of Paul Cleary's latest book, and in it he reflects on the Mining Boom and Australia's Future. Paul has been reporting on politics and economics for more than 20 years. He's a senior writer with the Australian, and has been an advisor to the East Timor government.

Excerpt below...



Chile, a less affluent resource-rich country, has shown just how inept our politicians and economic experts really are. Several years ago Chile put in place a mechanism to ensure that its politicians didn’t blow the proceeds of the country’s lucrative copper mines. Any revenue above a set threshold went straight into tightly controlled sovereign funds. When the GFC came along, Chile was able to use the fund to deliver an even bigger stimulus to its economy than Australia did, without racking up a single peso of debt. Other resource-rich countries have similar policies. Norway, a country of only four million people, has saved more than $450 billion in just fifteen years. When its oil is gone, Norway will be able to live off the interest, thereby maintaining its enviable standard of living into the future. There are many other examples. The essential idea is to turn non-renewable resources into a financial asset that will last forever….

The Australian economy is now sinking hundreds of billions of dollars into expanding mineral and energy production. Our state and federal politicians have become so bedazzled by the prospect of even greater mineral riches that they are eagerly facilitating a resources stampede while giving less regard to long-term ecological and financial consequences. Increasingly, resource development in Australia involves weak and inept governments up against muscular multinationals that are prepared to go as far as removing political leaders to secure their interests. Such were the dynamics of the mining companies ‘ spectacular defeat of the super-profits tax. Without a fairer tax, Australia will continue traveling at breakneck speed towards the bottom of the quarry, a journey that will wreak havoc on the non-resource sector and potentially leave many people far worse off. As the resource boom accelerates, it will drive the dollar sky-high, forcing up the cost of doing business for everybody. Industries such as tourism and education – industries that, unlike mining, involve many jobs – will fade away. But what happens if commodity prices suddenly collapse, as they did with the GFC in 2008; or worse, when the resources run out?…. without a resources fund, we are stealing from future generations. Without such a policy, this mining boom amounts to theft on a scale never before seen in this country’s history.

 

Yes, I've never understood why so many of our natural resources are sold for less to overseas entities than they are to Australian companies, it doesn't make sense. And to not have any plan of saving for the future is outrageous. This Government and many before them have proven time and time again that they only care about getting re-elected, not in planning for Australia's economic future.

 

Australia = 30% tax, high wages, high levels of regulatory compliance = high CAPEX + high OPEX.

Qatar = 10% tax, low wages, lower levels of regulatory compliance = low CAPEX + low OPEX.

Which is more attractive to you as an investor??

I doubt very much that the Australian projects would have even been approved unless there were some concessions given on royalties. Maybe our government gave away too much, but it's hard to know for sure.

 

Slightly off tangent, but here's a few sites where you can compare countries

Compare

If Qatar were your home instead of Australia you would...
be 94.74% less likely to be unemployed
make 2.4 times more money
be 7.4 times more likely to be murdered
consume 96.26% more oil
die 3.69 years sooner
spend 66.96% less money on health care
be 63.19% less likely to be in prison
be 44.92% more likely to die in infancy
use 1.85% more electricity
be equally likely to have HIV/AIDS
have 18.38% fewer babies

Choose a country to compare and contrast to

Might be good for the retiring overseas thread also

 

Hmm.. Doesn't appeal for retirement.. they can keep their sand. Oman might be alright.

 

It's pretty pathetic how our govco sell out to big business. Not only do they fail to collect and save funds from resources that one could argue are 'the peoples', but at the same time greater export competition and prices serve to only cost Aussie more money.

Gas is a good example. Let's take LPG for example. The bulk of LPG in Australia comes from Natural Gas sources, some from refining petroleum products. The LPG price in Australia is hinged to the Saudi Aramco index, which is an index controlled by the Saudi Govco effectively. This is a global trading index.

So while we have fuel that already has a network across the country, is locally derived (remember we import a degree of petrol, and most of our diesel), LPG is a dying product. Sure all fossil fuels are a dying product, but one only has to look overseas where LPG/LNG/CNG are being implemented as stop gap measures. LPG producing less CO2 than ULP, is far cleaner, and exponentially healthier than diesel (which is a known carcinogen after all).

LPG prices have been rising for sometime making it less viable as a cost saving measure. When our LPG is available cheaper overseas in retail environments than locally, you know something isn't right.

So while a network of the best fossil/stop gap fuel there dies of in Australia, other nations look and start building to use our resources.

It's not the lucky country, it's the backward country.

 

Sorry

 

In 2022, Norway's oil fund was larger than the combined wealth of the 10 richest people in the world (per Forbes).

It makes $1 billion per week -- and holds 1.4% of the world's shares.

 

Price of petrol in Norway



1 AUD = 6.86 NOK

So 22.12 NOK = $3.22 per litre . Go figure

Cheers,
Oracle.

 

Just as well they're big on renewables, thermal and gas then ... also they're in the midst of a conflict in their region with one side being a large oil producer

 

Yes something smells gassy here.

 

Smelt gassy

 

Norway’s $1.4 Trillion Wealth Fund Returns 10% on Tech Surge - BNN Bloomberg

 

It would have been easy to use the mining boom of about 20 years ago to create a fund like that of Norway. Opportunities have been missed in Australia, with governments of all persuasions failing to look at the bigger long-term picture, often for political reasons. Time, adding to investments regularly and compounding have worked very well for me. They should work well for anyone, governments, and entities.

 

And yet Norway still has gov debt, high taxes, low growth not much above average G20 nations and according to numbeo is 13% more expensive to live in than Australia.
And probly has better wealfare.
So all that wealth is useless for the population.

The wealth has been much more spread out here in AU giving better living stds to many more people.

 

https://www.cnbc.com/2024/01/30/wor...lth-fund-posts-record-213-billion-profit.html

 

And how much in Trillions did it loose in 2022.

The Norway fund is basically scamming it's own citizens. Provides no benefits.