Australia’s gas giants are raking in the profits from the war in Ukraine, according to the independent Australia Institute.
Liquefied natural gas (LNG) profits were up to $40 billion extra in the 2021/22 reporting year, with almost no increase in the cost of production, according to research released on Wednesday.
However, taxpayers are missing out on a fair share of the money made on Australian gas sold overseas, which has been boosted by “war profits” since Russia’s invasion of Ukraine, institute head Richard Denniss said.
An Australia Institute survey in June found two in three (67 percent) Australians support the introduction of a windfall, or one-off, levy on oil and gas profits with revenue raised to help households and businesses pay bills.
Western Australians (71 percent) were the most likely to support the introduction of a windfall profits tax, followed by Queensland residents (69 percent), with Victorian and NSW support at 64 percent.
Prices for Australian LNG exports more than doubled from $7.50 per gigajoule in 2020/21 to $16.20 per GJ in 2021/22 and are expected to rise further to an average $19.90 in 2022/23, the institute said.
This jump saw the value of LNG exports from Australia more than double to $70.2 billion in one year.
“We estimate the war-related windfall gain to LNG companies in 2021/22 at between $26 billion and $40 billion,” analyst Mark Ogge said.
Australia’s producers expect growing demand for Australian LNG shipments as Europe looks to reduce dependence on Russian gas.
Denniss said a windfall tax on the extra profits could fund the entire $20 billion Rewiring the Nation plan proposed by the Albanese government and compensate Australians hit by widespread price rises.
“While households and businesses are facing soaring bills, these companies are essentially profiteering from the war in Ukraine,” he said.
A new levy on Australia’s LNG producers could also encourage them to supply domestic customers instead of shipping most of the gas offshore, he said.
Australia’s competition watchdog has forecast an increasingly tight gas supply in eastern states, which will keep upward pressure on already high prices in 2023.
A one-off tax on LNG exporters also has the support of leading economists, including the Grattan Institute’s Tony Wood and former Treasury boss Ken Henry.
In May, the United Kingdom announced a new 25 per cent levy on the “extraordinary profits” of oil and gas firms operating in the UK and its offshore fields, with the tax revenue to help fund the extra cost of living support.
