Oil and gas producer Santos says governments are to blame for east coast gas supply problems.
Prime Minister Malcolm Turnbull recently announced measures allowing the federal government to restrict the export of liquefied natural gas (LNG) to protect domestic supply.
Santos chief executive Kevin Gallagher says a reliable and affordable domestic gas supply is essential for households and businesses, but a successful LNG export industry is also important.
“The current domestic supply issue is not the fault of the LNG projects at Gladstone,” Mr Gallagher told shareholders at Santos’s annual general meeting in Adelaide.
Kevin Gallagher took aim at governments over gas crisis. Photo: David Mariuz
“It is the result of a complete failure of regulation in the wholesale gas market and actions by state and territory governments to ban or restrict exploration and production.”
If Santos gets the go ahead for its Narrabri gas project in north west NSW, among others, there will be no talk of a gas shortage on the east coast, Mr Gallagher said.
Chairman Peter Coates said there is no shortage of gas, but a shortage of uniform government policy and support for the orderly development of supplies.
The export market had underpinned the development of Queensland LNG projects, and without them the gas would still be in the ground and unavailable to the domestic market, Mr Coates said.
He was re-elected as a director at the meeting, and told shareholders he intends to step down as chairman in the coming months.
Meanwhile, Chinese private equity firm Hony Capital and its associates, which include Chinese gas distributor ENN Group, has increased its stake in Santos to 15 per cent by snapping up another 48 million shares.
The shares – equal to 2.3 per cent of its issued capital – were purchased at $3.84 each, a six per cent premium to the stock’s market value on Wednesday.
Santos shares were up one cent at $3.64 at the close of trading.
Hony Capital has about $US10 billion of assets under management, according to its website, with investments around the world in sectors including machinery and equipment, pharmaceutical, healthcare and financial services.
The firm claims to be an expert in restructuring state-owned enterprises.
Santos made a $500 million private placement to Hony in November 2015 as part of $3.5 billion in capital raising initiatives.
Hony Capital chairman John Zhao said at the time his group had invested in Santos “because of its strategic position in Australia and synergies with the rapidly growing China energy market”.