Factcheck: does Australia give away export gas for free? Yes, it does.

The claim that Australia gives away export gas for free has been at the centre of the debate around taxing Australia’s gas exports.

So, is it true?

Gas companies export approximately 80 million tonnes of liquified natural gas (LNG) from Australia each year, and just over half of this LNG is extracted from offshore areas controlled by the Australian Government. The Australian Government does not make the gas companies pay for this gas, thereby giving it away for free.

This contrasts with onshore gas governed by state governments that charge gas companies to extract gas through “royalties”. This happens mainly in Queensland, where the government expects to raise $1.2 billion in petroleum royalties this financial year.

State governments charge royalties because, according to the WA Government:

“Petroleum resources are owned by the community and a royalty is a purchase price for the resource. The community expects a fair return for the loss of its non-renewable petroleum resources.”

Because the Australian Government chooses not to charge a purchase price for the gas that it manages on behalf of the community, it is literally giving gas away for free.

While it does not charge a royalty, the Australian Government has the Petroleum Resource Rent Tax (PRRT), which applies to certain profits of oil and gas companies.

Unfortunately, according to the Australian Government (p180), as of 2023, “not a single LNG project has paid any PRRT, and many are not expected to pay significant amounts of PRRT until the 2030s.”

Some gas exporters stated that they never expected to pay PRRT, essentially receiving “free gas forever”.

This has meant that over the last four years, multinational companies have made $170 billion exporting gas, which they got for free.

The Albanese Government made minor changes to the PRRT in 2023, limiting the use of tax deductions to 90% of applicable profits in any year. While this means most gas exporters will start to pay some PRRT in the coming years, Australia will continue to give away large volumes of gas without royalties and without PRRT payments – in other words, for free.