North Australia Digest – 12/12/2012

The Australian
The Northern Territory government is hoping to finalise an agreement with gas company ENI today which is said to be “critical” to keeping Rio Tinto’s loss-making aluminium refinery open, potentially saving up to 1400 jobs. The proposed deal would see the Northern Territory government sacrifice around 30 per cent of its domestic gas to power the refinery, putting pressure on the company to keep the plant running. Its closure could cost the Northern Territory around $400 million a year.
Opposition assistant Treasury spokesman Mathias Cormann has said that resource taxes are costing more than they raise, claiming the Australian Taxation Office had been provided with extra funding in the 2010-11 budget to implement the new resource taxes. “The operating cost of implementing and administering the new resource rent tax arrangement, including the MRRT and existing and extended PRRT, is estimated to be $60 million over the financial years 2010-11 to 2012-13,” Senator Cormann said. The MRRT failed to raise any revenue in its first three months of operation. “We are now in the ridiculous situation where the MRRT appears to be costing the budget and the economy more to administer and comply with than it is raising in revenue,” Senator Cormann said.
A Manpower Employment Outlook Survey has shown that next year may see a drop in hiring intentions in the mining and construction industry to its lowest point since the global financial crisis. The survey, released yesterday, reports an 8 per cent fall in hiring intentions for the first quarter next year. Michael Sacco, National client manager at Manpower Group Australia and New Zealand, said these trends reflected the tough conditions the industry is facing. “A lot of the cutbacks are due to the high Australian dollar, the lower commodity pricing and increased operation costs,” Mr Sacco said.
The Australian Financial Review
Woodside Petroleum chief executive Peter Coleman says continued cost blowouts in the oil and gas industry would jeopardise long-term investment opportunities in Australia. Coleman suggested Woodside’s own new $1.3 billion joint venture in Israel is a reminder that investors and companies are becoming more willing to move their capital overseas as costs continue to rise in Australia. “I think what [investors] are doing is starting to send signals that investment in Australia is becoming less competitive compared to their other choices,” Mr Coleman said.
Woodside chief Peter Coleman has also said companies in Australia’s energy sector were still adjusting to the realities of delivering large-scale LNG projects. This follows a memo to workers on Chevron’s Gorgon liquefied natural gas project that banned workers from sitting down during their shifts in an attempt to increase productivity, reported here yesterday. Coleman said the real problems with efficiency at many projects are “inefficient regulatory process, internal process and the explosion of cottage industries”.
BHP Billiton has sold its stake in the Woodside Petroleum-led Browse liquefied natural gas joint venture to Chinese PetroChina for $US1.63 billion. The deal, which sees BHP selling an 8.33 per cent stake in the East Browse joint venture and a 20 per cent stake in the West Browse venture, is expected to be completed in the first half of 2013, subject to regulatory approvals.
The West Australian
The West Australian also reports on Peter Coleman’s attack on Australia’s “cumbersome government regulations”, which result in increased costs and uncertainty for many projects. In a keynote address in Perth yesterday, Coleman highlighted the enormous state and federal taxes, which he said amounted to a taxation rate of 70 per cent of net present value of LNG projects . “The majority of the tax rate, typically about 80 per cent, is paid before a project begins to turn a profit,” Mr Coleman said.
Resources companies in Western Australia’s Pilbara region are responding to the accommodation shortage in the area by housing workers on three large catamarans moored in Onsolow’s Beadon Creek.