Woodside, Chevron Seek Australia Carbon Cost Relief

By Angela Macdonald-Smith

Sept. 15 (Bloomberg) -- Liquefied natural gas producers in Australia have called on the government to grant them free carbon permits in the proposed emissions-trading system to ensure they remain globally competitive.

The government needs to ensure industries such as LNG that help other countries reduce carbon pollution aren't hampered by a national emissions reduction program that operates in the absence of a global system, the Australian Petroleum Production & Exploration Association said today. The Canberra-based group's members include Woodside Petroleum Ltd. and Chevron Corp.

Under Australia's proposed carbon trading system, due to start in 2010, LNG producers wouldn't qualify for any free emissions permits, increasing costs for ventures that compete for customers against rivals in countries such as Qatar and Indonesia where there is no cost placed on carbon. The association proposes a category of industries called Clean Global Contributors that qualify for free permits.

``The intention is that this would maintain the competitiveness of the industry while the international policy distortion is in place,'' Belinda Robinson, chief executive of the group, said in a telephone interview. ``It's going to be tough to move'' the government from its proposal, she said.

Every extra metric ton of cooled gas that the LNG industry can export to China will help avoid global greenhouse emissions of up to 6.8 tons in net terms, the industry group calculates.

The association represents companies including Perth-based Woodside, operator of the North West Shelf LNG venture, ConocoPhillips, Chevron, BHP Billiton Ltd., Inpex Holdings Inc. and Royal Dutch Shell Plc, all of which have interests in producing or proposed LNG projects in Australia.

Woodside, operator of the proposed Browse LNG venture off northwest Australia, said last month it may cut spending on the project, estimated to cost as much as $30 billion, because of the planned carbon trading system.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net