Chevron warns shifting rules threaten future Australian gas investment

Chevron’s global CEO Mike Wirth has delivered a blunt warning that shifting regulatory and industrial relations settings are discouraging his US energy giant from expanding its multi-billion-dollar operations in Australia.

Coming off a recent meeting with Prime Minister Anthony Albanese, Wirth said despite Chevron’s 70-year presence in Australia – where it operates the Gorgon and Wheatstone LNG projects and supplies almost half of Western Australia’s domestic gas – the company had no plans to pursue further expansion in WA or enter the east coast market.

“It begins with the rocks, and so you have to go where the geology leads you. But then there’s a lot of additional work that goes on in working with governments to understand their expectations for development, their regulatory regime, the tax regime, the industrial relations and labour obligations that would come with an investment,” Wirth said.  

“We need predictable processes. We need to understand the rules of the road, consultation and permitting the approval process is fundamental. And you know, as they say, time is money.” 

The comments come just weeks after ExxonMobil, the world’s largest oil and gas producer, announced it would hand over its Australian operations to Woodside Energy as it prioritises growth in the ASEAN region. Both moves underscore concerns that Australia’s rising regulatory burden is weakening its competitiveness against LNG rivals such as Qatar and the United States. 

Wirth singled out long approval timelines, new labour laws that could drive pay rises of up to $80,000 a year for some workers and the risk of retroactive policy changes such as east coast-style gas reservation as deterrents for new investment. 

“In Western Australia, we understood from the outset there was a domestic gas obligation and built that into our projects,” he said.   

“Where we run into problems is when policies are applied retroactively. That undermines the technical and economic basis of a project.”  

“And so, if we know those things upfront, they’re factored into the development of a project and the investment economics. The problem arises if those types of policies emerge later and someone tries to apply them retroactively, which undermines the technical basis for the development. 

Comparing Australia’s policy environment to the relative ease of expanding LNG in the Middle East and US, Wirth said Chevron would instead focus on developing backfill fields for its existing WA projects while directing major growth spending elsewhere.