Australia is Too Expensive, Says BP Boss

From Financial Review

The local head of global fuel giant BP has warned Australia is losing investment because it is increasingly expensive to do business and the federal government is failing to tackle the issue.

BP Australasia president Paul Waterman cited proposed restrictions on domestic gas prices, an inability to implement the strategic tax reforms of the Henry Review and import tariffs on ethanol as current policy problems.

BP is a big investor in liquefied natural gas production and exploration off north-west Western Australia and operates oil refineries as well as petrol stations.

Mr Waterman did not specify any plans to shut down its refineries or reduce LNG investment, but warned that refining was difficult in Australia because of the costs compared to cheaper Asian rivals.

Low gas prices due to more supply in the US and cheaper producing regions such as in east Africa threatens Australia’s multi-billion-dollar suite of projects, with decisions still to be made about an estimated $100 billion in projects.

Oil refining is rapidly shrinking in Australia, with Caltex cutting more than 600 jobs this year amid plans to exit refining.

“Fundamentally, Asia sets the margins you make in a refinery so you have to live with Australian costs and that makes refining more difficult,” Mr Waterman told a business lunch in Melbourne.

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