The men who destroyed Australian energy
The worst corporation in Australia, Santos, is lying again. It's a familiar tale, one that has played out time and time again in the country's energy sector. But this time, the consequences are even more dire.
Let's go back to the beginning. In 2010, Santos, led by the now-retired David Knox, created a gas cartel by lying about its gas reserves. This cartel, known as STO, was a major player in the Australian energy market, and its actions had far-reaching implications.
Knox, in a display of hubris, claimed they had enough gas to support two LNG trains, a bold statement that would later prove to be a costly mistake. The approval of the Gladstone LNG project, a transformative venture for the company, was based on this false assumption. But as the project progressed, the truth began to unravel.
In January 2011, the Santos board, chaired by Peter Coates, approved a $16 billion plan to go ahead with two LNG trains from the start. This decision, coupled with other factors, led to GLNG buying more than half of its gas from other parties in the last quarter. In hindsight, Knox's confidence in their gas reserves was nothing more than a leap of faith.
As the project continued, Knox assured investors of their gas reserves, stating they had plenty of gas and were not participating in recent acquisitions. But this was a facade. Santos was secretly planning more domestic gas purchases, a move that would later be revealed in August 2012, causing the GLNG budget to rise by $2.5 billion.
The damage caused by Knox and Santos is immeasurable. The East Coast gas market failed due to the cartel's actions, and the consequences were felt by all Australians through ever-increasing utility bills. This was not an investment; it was a swindle, a racket orchestrated by white-collar criminals.
The impact of STO's anti-market practices is still being felt today. The federal government's domestic gas reservation scheme, which Santos now opposes, could create energy shortages and drive up prices. The scheme, as proposed, is retrospective and would force LNG exporters to reapply for export rights annually, with unclear and potentially unfair terms.
The cartel's actions are a clear violation of the Competition and Consumer Act 2010, and the Australian Competition and Consumer Commission (ACCC) should take action. The ACCC and the Commonwealth Director of Public Prosecutions should investigate and prosecute STO for criminal cartel conduct, including price fixing, bid rigging, market sharing, and restricting output or supply.
In my opinion, Kevin Gallagher, the CEO of Santos, should be arrested for his role in this anti-market behavior. The damage caused by Knox and Santos is a stark reminder of the consequences of corporate greed and the need for regulation to protect the interests of the Australian people.
