Page 5 - AsianOil Week 21 2022

AsianOil COMMENTARY AsianOil

– though it will come under more pressure to still emitted, even though they are subsequently
adopt a tougher stance. And the ALP’s plan for managed.
reducing emissions only targets certain sectors Performance issues at existing CCS projects
but it seems that oil and gas producers are likely have also resulted in questions being raised over
to face a gradual tightening of acceptable emis- how much of a contributor the technology can
sions levels. be to decarbonisation. Chevron’s CCS project at
Albanese has ruled out a carbon tax, however, the Gorgon LNG terminal in Western Australia
and it seems that offsets will play a significant has been in the spotlight in particular, with it
role in Australia’s decarbonisation plans. The recently emerging that the facility continued
country’s safeguard mechanism requires the to operate at roughly half its designed capacity
largest polluters to offset emissions above a cer- (See AsianOil Week 20). Chevron has said that it
tain threshold and the ALP has plans to make does not currently have a timeline for when the
gradual reductions to baselines under that CCS project might reach full capacity and that
mechanism. it is still learning how to optimise the facility’s
Additionally, Albanese has resisted Green performance.
calls to end new coal and gas developments. CCS elsewhere projects may not run into the
Indeed, the ALP gained ground in coal-mining same challenges as Gorgon, but with other Aus- Australia’s oil
areas in the election. tralian companies proposing to develop carbon
The Greens, meanwhile, are pushing for a tar- capture facilities alongside LNG terminals, the and gas industry
get of net-zero emissions by 2035 – rather than performance of this technology will continue to will be conscious
the planned deadline of 2050. And some of the be in the spotlight. If the CCS projects that come
newly elected independents want to see emis- online later this decade also struggle with per- of looming
sions reduced by at least 50% by 2030. While formance, opposition to the technology could
the ALP is anticipated to resist calls to bring in grow and calls to restrict oil and gas production adjustments
more ambitious targets than what it is currently instead could intensify.
planning, it appears that the party should expect This too creates additional uncertainty for to emissions
ongoing pressure from Greens and those inde- Australia’s oil and gas producers, especially in reduction targets.
pendents that favour stricter environmental the longer term. In the shorter term, Australia’s
policies. gas producers in particular want to ramp up out-
put to help meet growing demand for non-Rus-
What next? sian gas in the wake of the war in Ukraine. And
The change in government in Australia coincides with Labor not opposed to new projects coming
with a push among LNG operators in the coun- online, this can be achieved provided new pro-
try – and others – to build carbon capture and jects clear regulatory and permitting hurdles.
storage (CCS) in order to address their emissions In the longer term, though, Australia’s oil
footprints. However, CCS has come under fire and gas industry will be conscious of looming
from environmental groups, among others, over adjustments to emissions reduction targets and
the fact that its use means GHGs are ultimately what impact they could have on operations.™

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