Santos CEO Kevin Gallagher likens State of Victoria to North Korea

Santos boss Kevin Gallagher has taken an extraordinary shot at Victoria’s investment climate by comparing the State to North Korea, as the gas industry ramps up demands for cuts to red tape.

Mr Gallagher poured fuel on the fire of a national debate about the industry’s regulation as fellow exporter Woodside received long-awaited Federal approval on the extension of the North West Shelf gas plant.

Mr Gallagher praised Queensland, WA, the Northern Territory and South Australia as “very supportive jurisdictions” for onshore investment.

“Victoria, North Korea, they’re in a different category altogether,” he told the Australian Energy Producers conference in Brisbane.

“I’m gonna get in trouble for that one. I know I am.”

He said he would rather invest into the United States or Papua New Guinea than Australia.

“If I had a dollar to spend in PNG, Alaska or Australia today, for the same project … it would be PNG or Alaska,” Mr Gallagher said.

The Santos chief said the red tape issue meant he would prioritise states like Queensland, adding he would “not go to Victoria again”.

He also took aim at climate activists, saying activism and “aggressive transition policies” had slowed the energy transition down.

“Every time you try and shut down gas, you see coal consumption increase. And the idea that if we shut down all fossil fuels, people will jump to less affordable energy is a dream, it’s a pipe dream,” he said.

Victoria’s economic management has been under pressure amid concerns of growing public debt, which is expected to near $200 billion by the end of the decade.

The State’s oil and gas industry has been in decline, as old operations in the Bass Strait near the end of their lives and amid industry complaints that red tape blocking is new investment.

The troubles have sparked warnings the southern state will face a shortage of gas before the end of the decade.

Victoria also banned onshore drilling for seven years until 2021, stiffing the flow of investment into the sector.

But Victorian Resources Minister Lily D’Ambrosio hit back, labelling Mr Gallagher’s comments “hysterical”. She said a forecast gas shortfall had been pushed back a year.

“These comments are truly hysterical, unhinged and plainly wrong, there are billions of dollars of new gas investment scheduled in Victoria for this year alone,” she said.

“Big energy companies are only focused on lifting their prices and profits, our focus is on driving down power bills for Victorian families.”

Ms Ambrosio said bringing on more gas would be part of the State’s transition.

Responding to the comments, Queensland Resources Minister Dale Last said his State was “open for business”.

“We want to see continued development in that gas sector,” he said.

“It’s a good news story . . . as opposed to what’s going on in the southern states.”

He said the southern states were welcome to buy gas from Queensland but his State should not be punished for their inaction developing supply.

Adelaide-based Santos has been in regulatory wars across the country. The company has been waiting for the approval of the Narrabri gas project in NSW and fighting a major legal battle over the $5 billion-plus Barossa development off the coast of Darwin.

Santos also iced the $2 billion Dorado oil project off WA’s coast and blamed approvals uncertainty.

Mr Gallagher said the big issue was that decisions could be challenged even after approval was granted.

“An approval has to be an approval,” he said.

“We’ve seen some retrospective intervention, not just by the current government, the previous government started this ball rolling. It’s like a drug, they get hooked on it.”

The gas industry has been under pressure from environmentalists over the contribution of carbon emissions to climate change.

Export of the fuel accounts for about 8 per cent of Australia’s greenhouse gas output.

But the industry counters that gas is being used to phase out coal and back up renewable power. International Energy Agency regional boss Sue-Ern Tan said energy demand would keep growing in India and South East Asia.

She said gas would play “a very key role” meeting that growth.

Mr Gallagher said Australia’s position as an energy supplier

“We were the reliable energy supplier for 40-odd years into Asia,” he said.

“We’ve lost that reputation in a very short period of time.”

Mr Gallagher said “investment certainty” would be needed to recover the reputation.

The reporter travelled to the AEP Conference as a guest of the lobby group