Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Hansard source

I am happy to clarify the government's position on this. I apologise for not getting the opportunity before the second reading amendment was moved. It is a very important issue that Senator Xenophon has raised, and the government recognises that. We of course did not support your second reading amendment, Senator Xenophon. We do already have a review of our offshore petroleum resource management process in place, which includes and encompasses an examination of the retention lease framework. Consultation on that review was completed late last year, around November. I am working with my department to respond to that sometime this year, and I am more than happy to work with Senator Xenophon on that issue.

It is a very important issue. There is a balance that we need to strike in that framework, a balance that needs to attract investment and give those investors, those companies, security that they will be able to make a return on what are very high costs and very risky investments in exploring frontier areas in sometimes very deep waters. They do need to be given a fair opportunity to make a return on those investments. Otherwise, no-one would turn up to make them. We are not going to have the resource unless someone originally explores for it. While our framework is under review, we have to strike an appropriate balance between the competitive tension that Senator Xenophon and also making it attractive for people to invest here and be able to make a return.

I will respond to a couple of other points that Senator Xenophon raised in his contribution—the specific ones regarding Bass Strait, and also the Great Australian Bight. If I can say respectfully, Senator Xenophon, it is a little disappointing to me that you are trying to have your cake and eat it too in this debate. Yes, there is a substantial resource in Bass Strait; there is no doubt about that. There is a lot of gas left in Bass Strait. What there is not a lot of left, or there is not as much of what was there before, is oil, or condensate. We must not forget that one of the prime reasons that the Gippsland basin was developed was because of that condensate, that oil resource. That was the economics behind the development of the resource. The gas in some senses was a by-product. That has often been the history of gas developments around the world—that gas is often the secondary product that is created from an oil play. That is why gas can often be quite cheap. Manufacturing industries are often located near oil developments where gas is a by-product and a cheap by-product. That is certainly what happened in Victoria historically, and the Victorian manufacturing industry has benefitted from that resource.

The reality right now is that there is not as much oil in the Bass Strait as there once was. So the average costs of developing that resource are now high because there is less of that product to sell and there are fewer products to sell from the development of those resources. The average cost of developing that gas is higher. It is not necessarily the panacea that Senator Xenophon makes out.

While we are looking at our offshore management processes—and I am very open to suggestions to improve competition to develop that resource—it perhaps will not be as easy as Senator Xenophon makes out. The resource is there but, obviously, it comes down to at what cost we can develop that resource and whether that cost can be paid by the gas customers.

That brings me to the Great Australian Bight, which will no doubt come up further in this debate. On Senator Xenophon's point, on one hand you would like to develop the Bass Strait and get that gas out of there but on the other hand you are saying that you want to have a complete ban before even our environmental regulators can look into whether we can develop that resource in an environmentally sustainable way and also protect the manufacturing interests that Senator Xenophon spoke of. I do not doubt your sincerity, Senator Xenophon, in wanting to see a strong manufacturing industry in this country but it does need energy to survive.

There is no doubt there is excitement around the potential resource that exists in the Great Australian Bight. It is a very prospective resource—perhaps one of the best and most prospective in the world. I spoke to Chevron in the United States a few weeks ago and this is one of their top priorities around the world in terms of prospectivity. Again, Senator Xenophon, the reason people are excited about the resource is not the gas; it is the oil that is potentially there. We do not know the resource yet. It needs to be explored. But it will probably be the oil that attracts investment. There will be gas too, no doubt, if there is oil and that gas will then be able to be provided to those manufacturing interests you want to represent.

There is no doubt there are environmental issues. We must seek to protect the Great Australian Bight. That is very important. That is why we have an independent regulator. That is their job. That is why the experts should be left to look at this and assess this. If we were to support the approach from the Australian Greens, which Senator Xenophon says he supports, it would completely cut out the independent regulator from this process and completely stop the potential for jobs and opportunities for the South Australian economy in particular. So the government do not support that approach. We would like to see our resources developed for the benefit of our country, including the manufacturing industries of our nation. That needs to be done in an environmentally sustainable way and in a sensible way that takes expert advice from the people who know what they are talking about. We will balance the issues and interests that we need to to make sure we have both a strong economy and a protected environment.