SYDNEY/PERTH - Gas majors including Shell and Chevron warned Australia against introducing a windfall tax on gas exporters, saying it would deter investment and undermine energy security as LNG prices surge amid disruption caused by the Iran war.

Australia became the world's second-largest LNG supplier after Iranian strikes forced Qatar to halt production, with its export revenue set to surge due to lower supply caused by the conflict.

Canberra is weighing options to capitalise on the higher prices, with Prime Minister Anthony Albanese asking the Treasury Department to model a tax on LNG exports and suggest reforms to ‌the Petroleum Resources Rent Tax (PRRT). A suggested windfall tax could exceed 25%.

Cecile Wake, chair of Shell Australia, which exports gas from the Queensland Curtis LNG project and operates the floating LNG project Prelude off northern Australia, warned against "short-term fixes" in response to the energy crisis.

"At times like this, there is increased risk that strong and stable policy settings are sidelined by short‑term measures or populist rhetoric," she told the Australian Domestic Gas Outlook conference on Tuesday.

POTENTIAL IMPACT OF PROPOSED POLICIES

The proposed policies would "erode project values and render many of Australia's future growth opportunities uneconomic and uncompetitive compared to global alternatives," Wake said.

She said high commodity prices "already flow through to Australians through higher corporate income tax and PRRT receipts."

Asia spot LNG prices have doubled to three-year highs since the conflict in Iran began in February. Profits earned on long-term contracts linked to oil prices, which make up 75% of Australia's export shipments, are also expected to surge in three to six months.

Late last year Canberra introduced a gas market review that may reserve 15%-25% of east coast and Northern Territory exports from 2027. A more detailed policy is expected later this year.

Chevron called a windfall profits tax a "knee-jerk", "sugar hit" policy and the "exact opposite" of what Australia needed.

"There are discussions of market interventions, taxes and such," Danny Woodall, Chevron Australia's director of operations and maintenance, told the conference.

"It's a moment to reject that and to consider how we can encourage more investments so that we can secure that supply," he added.

Australia exported A$65-billion of LNG last year, but gas producers have been criticised for low tax payments under rules that let them recoup construction costs before paying tax.

Santos CEO Kevin Gallagher said the "narrative that LNG exports take money out of Australia" was wrong and "every LNG tanker that departs Gladstone represents around A$4.5-million in royalties paid to the state".

"Australia must have a policy framework that abandons ideology about 'fossil fuels' and instead encourages companies to invest, drill and produce more gas," he told the event.

Gladstone LNG is the only of the three Queensland export consortia to source third-party domestic gas while the others are net suppliers.

Shell has been exploring in the frontier location of the Taroom Trough in Queensland while earlier in March APLNG was approved for a drill program of close to 1 700 new coal seam gas wells that could run out to 2081.