Leadership Matters: Chevron Australia boss warns company ‘confused and frustrated’ by gas reservation battle

Chevron Australia boss Balaji Krishnamurthy says the company’s American head office is “confused and frustrated” about a proposed national gas reservation scheme.

The Federal Government wants to force gas exporters to keep 20 per cent of production for local markets in response to east coast shortages and rising prices.

Yet it remains unclear as to whether the proposed plan will override WA’s existing 15 per cent reservation rule amid mixed messages from the Commonwealth about how the two policies will work together.

Mr Krishnamurthy told a Leadership Matters breakfast hosted by The West Australian on Wednesday the domestic reservation debate added to a long list of political battles over energy that impacted the mood of investors.

“We’ve seen over the last few years, and it has spanned several governments to be fair, this intervention in markets in one form or the other,” he said.

“When you put it all together, this constant conversation, not too long ago we were talking about tax changes, now were talking about domestic gas.

“The cumulative impact of these things really erodes investor confidence. Competition for capital is global in nature.”

In effect — the industry could take their money elsewhere and get a better deal.

The final details on the reservation scheme remain undecided as the Federal Government considers leaving WA’s longstanding system untouched while creating a framework that treats all States equally.

Its another sign of mounting pressure across the political divide in Canberra on an industry that generates $36 billion annually for the State — WA’s second-biggest earner.

Labor’s reservation scheme mirrored a Coalition promise in the 2025 election and followed a price ceiling introduced in 2022.

The Greens have advocated for a 25 per cent tax on gas export revenue while One Nation wants taxpayers to share risk in projects by partly socialising ownership.

A reservation policy has been hotly-backed by gas users including Bluescope Steel in the hope the move will drive down prices, while environmentalists argue it would reduce the need for new gas projects to be built.

All the Canberra noise has not stopped Chevron pushing on with fresh investment into the State headlined by the $3b Gorgon Stage 3 expansion announced last year. That will help keep the Barrow Island facility full for decades.

The American giant has been among the largest-ever foreign investors into WA thanks to the roughly $80b spent with partners to build the Wheatstone and Gorgon export plants.

It’s also a top supplier of domestic gas at about a third of the local market.

Other side

Mr Krishnamurthy’s life in Perth where he “really enjoys the beaches” is sharply different to a childhood in the southern Indian city of Chennai.

He said when he was growing up it was commonplace to live through days-long rolling blackouts.

“Frankly, I did not know any better, because that was normal,” Mr Krishnamurthy said.

“The first time — I remember vividly — my Dad was able to afford a lead acid battery . . . the type where you have to fill in the distilled water to keep the (acidic) balance and all that to run a light and a fan. That was nirvana.”

India’s economy has improved dramatically since then after cutting back on government control and embracing markets, with growth of more than 6 per cent annually through the 2000s.

The International Energy Agency tips demand will outstrip almost every other country in coming decades. Gas imports are expected to rise though investment into clean energy is expected to outpace fossil fuels.

Mr Krishnamurthy said there was a “real human development foundation” that comes from energy.

“Seven billion people in the world don’t have that same access to energy that we do, and the standard of living that unlocks,” he said.

“When we flick a switch, we assume the lights will come on and the heat will go on during winter months, but that is simply not the case for a majority of the population in the world.

“My lived experience going back four decades in India is very much that story.”

Cleaning up

LNG accounts for about 8 per cent of national emissions and Chevron is targeting net zero Down Under by 2050.

Mr Krishnamurthy backed the importance of cutting carbon while keeping the lights on and bills under control declaring “it’s not either or”.

“We need an energy system that is affordable, reliable, and lower carbon, and addressing the climate change risks. That challenge is a hard one to solve, but it’s certainly worth solving,” he said.

The company invested in Australia’s biggest carbon capture and storage project at Barrow Island which has so far pumped more than 12 million tonnes of carbon dioxide underground.

Its been far from smooth sailing. The facility has performed well below target — about half of what was expected — and the company in 2021 promised to spend $40m on low carbon projects as a make good.

Yet the IEA and Australia’s Future Gas Strategy both expect the technology will be crucial to hitting net zero by 2050.

“Any scenario you pick, (CCS) is going to be a must have,” Mr Krishnamurthy said.

Going the distance

Asked his thoughts on One Nation’s reported plan for government to take partial ownership of resources projects the Chevron boss played a straight bat.

Mr Krishnamurthy said he supported the party’s promise of “leaning into the resource advantage that Australia has” and took aim at red tape.

“The regulatory settings (are) a real friction point for the investments to happen,” he said.

“I’m not looking for easier approval . . . but ability to cut through that bureaucracy to green tape or red tape to get to an approval step faster, whether it’s a yes or no.”

The company’s financials also offer an insight into the hot political battle over oil and gas’s contribution.

Chevron was the country’s fourth-biggest corporate taxpayer though payments for the gas through the Petroleum Resources Rent Tax have been below expectations at just $US135.6m last year. That’s about 1 per cent of the company’s Australian revenue.

Exports bring much wider economic benefits, however, as the sales effectively pay for the products Australians import like phones, fridges and cars.

Both Gorgon and Wheatstone will be multi-decade projects that require ongoing cash as gas fields deplete and need to be replaced.

That means the business — worth about $500b globally — makes investment decisions over long horizons in contrast to what Mr Krishnamurthy said was a world focused on the short term “sugar rush”.

He pointed to exploration by Chevron’s predecessor Standard Oil in the Canning Basin more than 100 years ago.

“WA did not become a global energy powerhouse overnight,” Mr Krishnamurthy said.

“It took decades of persistence, calculated risk taking, and making decisions with the long-term environment.

“The antidote to the short-term thinking . . . leaders that have that conviction, courage, and constancy of purpose.”