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Interview

with Stephen Robertson MP, Minister for Natural Resources, Mines and Energy; Minister for Trade, Queensland Government

09.12.2010 / Energyboardroom

Minister Robertson, you are Queensland’s Minister for Natural Resources, Mines and Energy and also Minister for Trade. Your portfolio places you as an ideal ambassador for the Queensland gas industry. How would you describe the current situation here in Queensland to our readers?

Queensland is going through a very exciting period of resource development, and not only in terms of our traditional strength in coal and minerals: Queensland is after all the largest exporter of sea-borne coal in the world. But we are also seeing the emergence of our coal seam gas to LNG export industry, which will be the first export industry of that type in the world.

Queensland has already received a lot of interest from some very large international players: Shell, ConocoPhillips, British Gas and PetroChina amongst others. What is it that attracts them to Queensland?

In my role as Queensland’s Minister for Trade when I travel regularly to Asia, and no matter where I go, the words ‘energy security’ are uttered in almost every meeting I attend. China, India, Vietnam and our traditional trading partners Japan and South Korea are seeing their energy demand growing, and this is inspiring the companies you mentioned to pay a lot of attention to meeting that demand. That is where Queensland stands ready to be a long-term, safe and secure supplier of energy. That makes us an attractive destination for investment.

Today, where would you say the biggest opportunities for investment and partnerships are in Queensland’s burgeoning gas industry?

At this point in time there are eight consortia that have publicly indicated an interest in LNG projects in Queensland. Out of these, five projects are seriously working through the environmental and other approvals.

The Queensland Gas Company consortium, which is a part of the BG Group, has approvals from both the state and commonwealth government, and their board has made a final investment decision (FID). It is understood that two further projects are close to FID.

Opportunities still exist for investment partners to come on board, but also for long-term and short-term contracts to be written to underpin the investment decisions of these various consortia.

One of the things that Queensland prides itself on is creating a one-stop shop for state government approvals through our coordinator general. It’s a model that has been widely recognised as very efficient for gaining the necessary approvals. The coordinator general brings all government departments together so that they can articulate the range of issues that need to be attended to by an investment proponent, and works with them to get them through those various proposals: not in a way that compromises the stringent conditions that the government expects of companies, but in a way that makes it as efficient and transparent as possible.

With these new investment opportunities there is an opportunity not only to attract foreign direct investment, but also to build a base in Queensland for a brand new industry. How is the government approaching the challenge of bringing in and attracting international interest in these projects but also building Queensland’s industrial potential?

Through the Queensland coordinator general not only do we set out the roadmap for companies to know ahead of time what they will be required to do in terms of necessary approvals: on behalf of the Queensland government the coordinator general also articulates a vision for communities that can benefit from the growth of these industries. For example, most of the consortia that are currently assessing their projects will export their LNG through Gladstone in central Queensland, which will mean a major boost for the city. We have started to articulate a vision for Gladstone so that the government knows ahead of time what needs to be done in terms of investing in new schools, improved health facilities and the social infrastructure that goes along with a growing community as well as the hard infrastructure.

Whilst we certainly look forward to the money that will be generated from the growth of these industries, we also want to make sure that the communities are sustainable in the long-term, so that a legacy is left from the exploitation of our resources, and Queensland is not just seen as a quarry: that we are more thoughtful about the value that we can attach to the exploitation of our natural resources.

The Bligh government has taken very positive steps to work both with the communities and with industry in order to make sure that landowners are fully satisfied with coal seam gas developments in the state. What other opportunities does the government have to work with industry to make sure these projects happen as smoothly as possible?

The challenge we faced when this new industry started to expand its footprint across the state was that whilst we have had a long history in resource extraction in Queensland (for over 60 years in terms of our export industries), the gas industry was moving into parts of the state that had not had that same level of interaction between landholders and mining or resource companies. That created a degree of angst amongst landholders who did not know what to expect when the gas companies came knocking on their doors.

The Queensland government has been keen to ensure that the rights of landholders are respected. We want to get the balance right: whilst we want to see the gas taken out and see this industry expand, it cannot come at any cost. These companies have a responsibility to act appropriately: there is a requirement to acknowledge that in addition to all the other permits and licenses that they may need, the social license to operate in a community is just as important. It is in the hands of these companies to ensure that they treat people properly.

This has now been backed up by a range of new laws put in place this year to ensure that appropriate and fair compensation is provided to landholders. There is a code of practice in place for companies to follow so that landholders are treated with respect, in addition to existing environmental protection measures that have always been in place but are now being drafted in a way that is very specific to the growth of this industry.

Do you think with all so many LNG projects starting to build momentum at the same time, that the biggest challenge in the years to come will be a challenge of supply or of demand?

I don’t think it will be a case of demand. However, I think there will be challenges for supply: not in an engineering sense, but because these companies have to build the workforces that allow them to reach full production in the timeframes they set themselves. This is a challenge also shared by government. One of the areas that we are paying a lot of attention to is the development of a skilled population, and that includes investment in the vocational training sector as well as working with industry to get an understanding of what their needs will be, and where we should jointly be putting our investments into the education and training sector. We are very proud to be looking sufficiently into the future, so that we can start making decisions now that will pay dividends in the future.

I remember during the last resources boom just a couple of years ago. I was then Minister for Health, and one of the challenges we faced in cities like Mackay was to attract nurses to stay working in the local hospital when they were able to literally earn double the money driving trucks in coal mines. It’s a nice problem to have, but it can be very challenging to ensure that there is a good balance across not just the industry, but more broadly as well. Nobody is going to thank you for the development of this industry if we cannot staff our hospitals properly.

It is crucial to think outside the traditional square of industry development and get a handle on the challenges that are coming our way. The federal government also has a role to play in terms of how they calibrate immigration policy to ensure that not only do we train our domestic population to participate in this industry, but that we also can bring in some skills from other parts of the world as well.

However, companies are keen to hire from within the local community, which is critical because these companies will be operating in parts of Queensland, particularly rural locations, that have had it tough over the last couple of decades. They have predominantly relied on farming to generate employment, and the farming sector has gone through some tough times, particularly with the recent record droughts. If these rural centres are to benefit from the coal seam gas industry, then part of that benefit has got to include improved housing and job opportunities for people in rural Queensland that will refresh and regenerate the communities that were until recently starting to wither on the vine.

You mentioned that you don’t think demand will to be an issue once these LNG projects get up and running. What will bring Asian gas customers to Queensland in the years to come?

Australia is seen as a very secure and safe supplier. Australia has always been known as a safe haven for overseas investments: there are strengths that we bring to any negotiating table that stand us in good stead against our competitors. But ultimately, it comes down to price. It is up to us to get the balance right: we want these companies to invest more broadly in the communities they work in, but we also have to acknowledge that we can’t make them uncompetitive. So in terms of tax and royalty regimes, the government pays a lot of attention to finding the appropriate landing point that ensures that whilst we get a good return for the exploitation of our natural resources, we don’t overcook it in a way that makes us uncompetitive.

If we were to come back and see you again in five years, what do you hope you could tell us about what has happened here in Queensland?

In five years’ time I would hope to see at least four consortia operating LNG trains and exporting LNG to the world. As a result of the investment in communities both on the coast and in rural areas, I would hope to see a growing population, schools and other social infrastructure being able to attract the teachers, nurses and other professionals, so that at the end of the day everyone goes home with a fair share from the exploitation of this wonderful resource.

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