Santos chief executive Kevin Gallagher has forcefully rejected calls from Australian manufacturers for below-cost natural gas supplies, warning that board directors would breach their fiduciary duties by agreeing to such terms.
The CEO’s comments mark a sharp escalation in the ongoing dispute between energy producers and industrial users regarding the Labor government’s proposed gas reservation scheme.
Gallagher challenged the logic of the manufacturers’ demands by drawing a parallel to the steel industry, asking why producers should sell gas at a loss when steelmakers are not expected to sell their products at discounted rates.
This rhetorical counterattack highlights the fundamental disagreement over price formation in the domestic gas market, with producers insisting on market-based pricing to ensure investment viability.
The tension arises as the Australian government seeks to secure domestic gas supplies for energy-intensive industries through reservation mechanisms.
Producers, including Santos, have previously argued that such policies could reduce the volume of gas available for export, potentially jeopardizing the country’s position as a major LNG supplier.