The Barossa Billions: Methane Cover-Up, Zero Royalties, and Australia's Looming Gas Export Crisis

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Inside the Economist’s Mind

Economic Insight

55 episodes

1 week ago

Inside the Economist’s Mind is a podcast that opens the door to how economists think, work, and solve real-world problems. Designed for economics students, early-career professionals, and curious minds, this show explores the logic behind big decisions—combining theory, data, and modelling with practical insights from the field.

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The Barossa Billions: Methane Cover-Up, Zero Royalties, and Australia's Looming Gas Export Crisis

Inside the Economist’s Mind

16 minutes 7 seconds

1 week ago

The Barossa Billions: Methane Cover-Up, Zero Royalties, and Australia's Looming Gas Export Crisis

This episode dives into the massive, yet highly controversial, Barossa offshore gas project, operated by Santos. Approved amidst an election campaign focused on gas exports, Barossa is one of the most polluting new gas projects under development in Australia.

We explore the dual controversies surrounding the project:

1. The Darwin Methane Leak Scandal: The Barossa project relies on extending the life of the existing Darwin Liquefied Natural Gas (DLNG) plant. Confidential documents reveal a "dirty secret": a design fault dating back to 2006 caused a major methane leak from the DLNG storage tank, a highly potent greenhouse gas up to 80 times more harmful than CO2. Estimates of the leak have varied, ranging up to the equivalent of millions of tonnes of CO2, or more than 8,000 new cars on the road every year it is in use. Critics call the handling of this leak a "national scandal" and a "cover-up" by Santos, ConocoPhillips, and regulators. Despite the opportunity to repair the faulty tank while it sits empty, Santos has chosen not to, deeming the decision a commercial one, and regulators have not forced a fix.

2. The Export/Tax Paradox: Barossa highlights a core flaw in Australia's energy policy. The project is expected to deliver long-term cash flows and supports energy security in Asia. However, The Australia Institute notes that Barossa will pay no royalties on the gas it extracts, and like other gas exporters, none have ever paid the Petroleum Resource Rent Tax (PRRT). Excessive gas exports have been blamed for causing Australian domestic gas and electricity prices to triple, leading politicians to propose forcing exporters to divert uncontracted gas to Australian customers. Despite being the world’s second-largest LNG exporter, Australia is now preparing to import significantly more expensive LNG (Asian spot prices are far higher than domestic production costs) to cover pending supply shortfalls in the southern states.

We detail how the BW Opal Floating Production, Storage, and Offloading (FPSO) vessel recently arrived and was successfully hooked up at the Barossa field, keeping the project on track for first gas in the third quarter of 2025, while examining the massive investment in local jobs, training, and the Barossa Aboriginal Future Fund (BAFF).

This episode asks: Can Australia justify approving massive, high-polluting export projects that pay little tax, while consumers face tripled energy costs and regulators allegedly enable a methane cover-up?