Australian oil and gas company Santos has reaped the gains of energy instability across the globe to post a huge profit increase in the first half of the year, prompting renewed calls for a windfall profits tax to be imposed on fossil fuel producers.
The energy giant on Wednesday reported record production, earnings and cashflow and a 300% increase in its underlying profit in the six months to 30 June.
Santos’ chief executive, Kevin Gallagher, told investors the world had changed since the company last reported in February, with Russia’s invasion of Ukraine having driven inflation, disrupted markets and caused price volatility in oil and liquified natural gas.
“There has been a significant shift in global energy policy towards energy security as a key priority,” he said.
The Greens leader, Adam Bandt, said the results showed Australia was “being taken for a ride” by “super-profitable billionaire corporations that make massive profits and send them offshore tax-free”. He called on the Albanese government to impose a tax on gas industry windfall profits in its first budget in October.
“When a nurse pays more tax than a multinational something is wrong,” he said. “The upcoming budget must fix Australia’s broken gas tax.”
The Australia Institute’s Mark Ogge said consumers should be angry that their energy bills had skyrocketed while the cost of gas production in Australia was largely unchanged. He said a windfall profits tax was an “economically responsible and fair way to undo some of the damage caused by Santos and other LNG producers to the Australian economy”.
The treasurer, Jim Chalmers, has repeatedly said the government was not considering a new tax on gas industry super-profits after calls by the Nobel prize-winning economist Joseph Stiglitz, the Grattan Institute and other groups.
Santos reported a half-year net profit after tax of $A1.66bn ($US1.167bn), up 230%. Its underlying profit was $A1.8bn ($US1.267bn), up 300%. The company’s average realised price for gas sold to Australian consumers on the east coast increased 22% to $6.49 a gigajoule.
After a merger with Oil Search completed in December, Santos operates across Australia, Papua New Guinea, the Himalayas and North America.
Gallagher announced a final investment decision has been taken to proceed with the Pikka Phase 1 oil project in Alaska at a greater cost than initially expected.
He said Pikka would be “net zero from first production” as the company would fund carbon offset projects and use carbon capture and storage. The activist group Market Forces said this was misleading as it referred only to scope 1 emissions – those released directly at the production site – and not the scope 3 emissions released when the oil was burned elsewhere after being sold.
Will van de Pol, a campaigner with Market Forces, said:
“This Santos decision to proceed with Pikka is yet another example of the company burning our long-term future”.
Gallagher said the company had deferred an investment decision on its Dorado oil and gas discovery project in the Bedout Basin, off the West Australian coast.
Quizzed about the controversial Narrabri gas project in New South Wales, Gallagher said the company was continuing with planning and resource appraisal and was seeking pipeline licences, but would not commit significant capital until all approvals were secured.
“Narrabri is a very strong project [that] can supply affordable gas to NSW customers,” he said.
Gas is a fossil fuel that is often described as having about half the emissions of coal when burned for energy, but studies have found this is an underestimate.
The head of the International Energy Agency last year backed scientific warnings that no new gas fields could be developed if the world was to limit global heating to 1.5C above pre-industrial levels. The UN secretary general, António Guterres, has made the same argument.
In June, he said fossil fuel companies and the banks that finance them “have humanity by the throat”.
