Oil and gas boss seals deal with Taiwan, hits out at Canberra

Carnarvon Energy boss Adrian Cook said Australia is losing some of its hard-earned reputation as a reliable jurisdiction for oil and gas investment at the hands of policy tinkering by the Albanese government.

Mr Cook’s warning came after Carnarvon finalised the sell-down of its stake in the Dorado offshore gas project to Taiwan’s state-owned oil and gas company, CPC Corporation.

Dorado is in the Bedout Basin off WA’s north-west coast.

He expects more interest from Asian national oil and gas companies in Australian assets as they take a pragmatic approach to the energy transition. The Taiwanese paid $US146 million ($226.1 million) for half of Carnarvon’s 20 per cent stake in Dorado and Carnarvon’s wider interests in the Bedout Basin off Western Australia’s north-west coast.

Santos owns the other 80 per cent of Dorado and is looking to sell down part of its stake to help meet its share of phase 1 development costs estimated at more than $US2 billion. The Dorado project, together with its neighbouring field, Pavo, has an estimated 189 million barrels of oil and 401 petajoules of gas.

Mr Cook said there had been a lot of interest from Asia’s oil and gas companies in the Carnarvon sell-down, but some wanted a bigger piece of the Dorado pie than Carnarvon could offer.

“Some of them we engaged with informally knowing that there was always the potential for Santos to offer some equity. We were having some informal dialogue with multiple parties who I’m sure would have engaged with Santos,” he said.

Under its deal with Taiwan, Carnarvon receives an upfront payment of $US56 million, and $US90 million towards Carnarvon’s share of the Dorado development costs if the project goes ahead.

Mr Cook said the transaction gave Carnarvon some of the funding it needed to meet its share of the build. Carnarvon hired Azure Capital as it looks to secure additional funding and has said the options include offtake prepayment and royalties.

Woodside Energy last week inked a deal with Japanese conglomerates Sojitz Corporation and Sumitomo Corporation to buy into the $16.5 billion Scarborough LNG project despite Japan voicing concerns about policy changes in Australia.

Mr Cook said the feedback he received indicated Australia’s reputation as a reliable investment jurisdiction and supplier was declining on the back of frequent policy changes, and the problem was not confined to the oil and gas sector.

“This cuts across not just oil and gas, it cuts across everything we export. The more we change the rules and regulations and the taxes, the more uncertain people get,” he said.

“Capital is mobile. I guess that’s something that I worry that we don’t appreciate enough that the capital in the world is easily moved to other jurisdictions, and when international oil companies or national oil companies look at where they might invest, there is a raft of different factors that sway decisions.”

Mr Cook said that included the stability of tax and regulatory systems.

“I think we’ve slipped a little bit. It would be nice to see some stability within government around things that affect sovereign risk just to bring some of the confidence and capital back into this country, across oil and gas, mining and everything else,” he said.

Santos is targeting a final investment decision on Dorado in 2024. The partners agreed to push back making the call in 2022 as cost pressures started to build up in the oil and gas and mining industries in WA.

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