Projects within SM's
development portfolios all compete for development capital. That capital will flow the the projects with best ROI's as investment risk is spread out. This is why IOC's deal with XOM is needed by XOM and why there are other SM's awaiting.
**********
Labor: LNG costs not our
fault
PUBLISHED: 19 AUG 2013 14:10:00
ANGELA MACDONALD-SMITH AND MARK SKULLEY
The federal government has rejected claims from Chevron that Australia’s high-cost economy is threatening the nation’s biggest energy project, Gorgon, even as the Maritime Union of Australia demands a 26 per cent pay rise and more than 100 other benefits for its members, including Qantas Club memberships and iTunes store credits.
As Chevron’s $52 billion Gorgon project became embroiled in the election campaign, trade union officials accused Chevron of seeking to dodge responsibility for poor labour productivity and high costs.
The union’s demands for employees working for 19 offshore oil and gas contractors around Australia include a 26 per cent raise over four years, no foreign labour without consultation, union control of hiring and four weeks holiday for every four weeks work.
Federal Energy Minister Gary Gray, who is under pressure in his Western Australia seat of Brand, said oil and gas companies were failing to control the costs of their staff and contractors.
“We do need our companies to get better in managing their productivity issues,” he said.
In Monday’s Australian Financial Review, Chevron Australia managing director Roy Krzywosinski said Australia has a two-year window to get policy settings right and fix industrial relations and productivity or risk losing out on billions of further investment in liquefied natural gas projects.
Prime Minister Kevin Rudd said he had studied China’s latest five-year economic plan and concluded Australia’s industrial relations system wasn’t hurting the industry.
The Coalition has already started taking steps to re-establish the Australian Building and Construction Commission, which could be used by the new federal government to help companies like Chevron overcome resistance from the union movement while they build expensive projects.
The chair of the working group, NSW Liberal MP Paul Fletcher, wrote to the ACTU last week and invited unions to discuss the plan.
ABCC TO POLICE BIG PROJECTS
“The Working Group has a fairly tight timetable; we are required to report to Mr Abbott by 30 August 2013, with a view to being able to move quickly on this issue should we be elected to government,” the email said.
Opposition resources spokesman Ian Macfarlane said the commission would be the “cop on the beat” of big projects. “You can’t have a situation where Australia can’t build resource projects because the unions are out of control,” he said. “The first step in bringing them into a fair situation, a balanced situation is to install the ABCC and that’s the first priority for us.”
“On projects where the unions are either breaking agreements or deliberately flouting agreements or trying as the project reaches conclusion to ratchet the wages and conditions up the ABCC will be the umpire on that.”
He backed Chevron’s view that trade unions are putting at risk expansion of the energy industry through exorbitant short-term demands.
“Chevron is being held hostage by unions who aren’t thinking long enough and hard enough about the impact of their actions on the long-term jobs of people who work in that industry,” he said.
Chevron is weighing up an expansion of Gorgon against a proposed new LNG export venture in western Canada.
In Queensland, BG Group says an expansion of its Queensland Curtis LNG venture has to stack up against options in North America and Africa.
Paddy Crumlin, national secretary of the MUA, said most of the claims were “catch-up” claims for arrangements already agreed between contractors and other construction unions for labour already committed on the projects.
Mr Gray, a former executive at Woodside Petroleum, rejected the suggestion that cost escalations at Gorgon, a huge gas project in north-west Western Australia, and other projects, are threatening growth in the energy industry.
CONFIDENCE ON EXPANSIONS
Mr Gray said he remained “an absolute optimist” that both Gorgon and Gladstone would be expanded, and that new ventures would proceed in a timely fashion at Woodside Petroleum’s Browse LNG project and at Santos’s floating venture in the Bonaparte Gulf off the northern coast.
“I think we are on track for 100 million tonnes of LNG by 2020 and we’re on track to be the world’s biggest producer of LNG or the world’s second biggest producer of LNG, but we need our companies to get better in managing their productivity issues,” Mr Gray said.
