Macquarie Senior Analyst for Oil and Gas Adrian Wood said that following the initial round of consultation between the government and relevant industries, the government was considering maintaining the PRRT regime to CSG projects.

“Such an approach would ensure consistency across the Australian LNG space, letting the market determine the most viable projects rather than government policy,” Mr Wood said. “As an established and understood system by both buyers and sellers alike, introducing the PRRT for the CSG projects would perhaps be the quickest and most effective means of removing the current uncertainty surrounding the proposed tax changes.”

Mr Wood added that the government would “like to see more cooperation between the CSG to LNG projects”, and that the promise of the PRRT could be “the carrot” to encourage project consolidation.

Santos has the most to gain from enforced consolidation due to the small resource base of the Gladstone LNG (GLNG) Project, according to Mr Wood. Other projects which could be impacted by changes to taxation or consolidation include the Shell Australia LNG (SALNG) Project, Origin Energy and ConocoPhillips’ Australia Pacific LNG (APLNG) Project, Arrow Energy’s Gladstone ‘Fisherman’s Landing’ LNG Project and the BG Group’s QCLNG Project.