Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

Right on cue, one of the members from over there says, ‘What’s it got to do with you?’ Perhaps if the honourable member would sit back, relax and just pop a Mogadon for a minute, he would actually hear what we have got to say. This proposal is being developed by Chevron, ExxonMobil and Shell. I understand that the Gorgon partners will consider a final investment decision shortly. This is the largest resource project ever proposed in Australia. Let me say that again: the largest resource project ever proposed in Australia. The total construction expenditure in today’s dollars would be close to $50 billion, generating around 6,000 jobs during the construction phase. The project envisages a three-train, 15 million tonnes per annum LNG plant off Barrow Island, off the WA coast. It also proposes a domestic plant and pipeline to supply gas to the WA mainland.

The Gorgon project will make an important contribution, assuming it proceeds, to the Australian economy and our energy security for many, many decades. The Gorgon joint venture partners estimate that, over the first 30 years of its life, the project would boost Australian GDP by $65 billion in net present value terms. It is expected that the project would return more than $33 billion to the economy through the use of Australian goods and services over that period. In advance of a final investment decision, the Gorgon project has already entered into contracts worth approximately $2 billion. Last Monday, one of the Gorgon partners, ExxonMobil, signed a sales and purchase agreement with Indian company Petronet LNG.. This is the first ever long-term LNG contract with India—again, something which the economy and the nation should celebrate. It is of itself worth $25 billion.

In addition to the contribution this project would make to the Australian economy, to exports and to employment, it would also make an important contribution to the fight against dangerous climate change. As some of the gas fields in the Greater Gorgon gas fields have a high CO2 content, the joint venture partners propose to capture and store that CO2 by injecting it two kilometres into a saline aquifer under Barrow Island. The proposal is to sequester some three million tonnes of CO2 per year. That represents around 130 million tonnes over the life of the project. Gorgon would be the world’s largest geological storage operation.

Getting a project of this size off the ground involves a lot of hard work and a high level of cooperation not only between the companies involved but between government and the companies involved and between the government in Western Australia and the government in Canberra as well. This great Gorgon project is no exception.

There have been three outstanding matters in relation to this project that we have been working on with the government of WA and the joint venture partners to resolve. Those problems are as follows: the finalisation of the necessary environmental assessments and approvals; the issuing of the necessary production licences for the project; and a commitment by government to indemnify the joint venture partners against third-party claims following the closure of the CO2 sequestration project.

In relation to the necessary environmental assessments, the Minister for the Environment, Heritage and the Arts has been working closely with the Western Australian government to ensure that these assessments are progressed in both a proper and timely fashion. In relation to the production licences for this project, the Minister for Resources and Energy has been working closely and productively with the joint venture partners to ensure these matters are settled as quickly as possible. And I am pleased to advise the House that the matter relating to the indemnity of the project operator against third-party claims after the sequestration site has closed has now been settled. Both governments have agreed to share the long-term liability. The provision of the indemnity is subject to the Gorgon joint venture partners making a final investment decision this year. It is important that we build on the Commonwealth’s existing regulatory framework and that we now develop a regulatory regime around this project that properly protects the interests of both the Commonwealth on the one hand and the Western Australian government on the other hand as well as the broader Australian community.

It is appropriate that the Commonwealth government has a direct role in advancing this project given its scale and significance to the Australian economy. It is also appropriate that the Commonwealth has a direct role in advancing this project given the important contribution it will make to promoting carbon capture and storage technology. Finally, the Commonwealth has a direct interest in this project given the environmental significance of Barrow Island. This project would not only contribute to the WA economy; it is a testament to how important the WA economy is to the Australian national economy. The government looks forward to working with the government and people of Western Australia as we seek to bring this project into reality.

This is a positive development of a highly complex and capital intensive project. It is a $50 billion investment. That is equivalent to something in the order of five per cent of GDP. This is a very large prospective project. That is why the government has been doing all it can in proper consultation with the joint venture partners. This sort of development is important news for the economy as we chart what is still an uncertain course of economic recovery ahead.

I notice that those opposite find a project of magnitude, the single largest prospective resource project in Australia’s history, a matter of amusement. I would draw their attention today also to a statement by Dr Henry, who was the subject of a question just before from the Leader of the Opposition. He said that the government’s measures taken to date, both the monetary policy response and fiscal response, have had quite an impact in supporting aggregate demand in Australia. The fact is that, as a result of the early and decisive action of the Australian government, so far Australia has been weathering the global economic recession better than most economies. We have the strongest growth, the second lowest unemployment and the lowest net debt and deficit of all of the world’s most advanced economies, and so far we are the only one of them not to have gone into recession.

But this means that there is no cause for complacency for the future. That is why the Treasury secretary made his statement today. That is why the government will do all it can to support private sector development projects in the country of the type that I have referred to in WA. The Australian government, the Western Australian government and our major resource companies will be working together to proceed with Australia’s economic development in what remains an uncertain period ahead and what will be for the nation and the world a rocky road to recovery.

See this speech in context