How the Iran war is driving an $18 billion windfall for Australian producers

How the Iran war is driving an billion windfall for Australian producers

Australia’s biggest gas producers are preparing to cash in on an expected $18 billion revenue boost next year due to the effects of the Iran war, intensifying calls for the government to impose a 25 percent tax on their exports.

Demand and prices for liquefied natural gas (LNG), one of the country’s most lucrative commodities, have soared since Iran began blocking gas tankers from leaving the Persian Gulf and launched missiles at a key LNG hub in Qatar, knocking out a fifth of global supply and triggering a global energy shock.

A gas platform off the coast of Western Australia.

Before the outbreak of war on 28 February, the Australian government was expecting a sharp decline in LNG export revenues from producers in Queensland, Western Australia and the Northern Territory. Official forecasters predicted revenue would fall from $50 billion to $47 billion in fiscal 2027; This has been dragged down by the impending wave of new LNG projects in the US and Qatar, threatening the market with oversupply.

Instead, the latest government forecasts to be published on Friday reveal that LNG revenue is expected to rise from $59 billion in fiscal 2026 to $65 billion in 2027; this is an increase of $18 billion over previous estimates.

The revised forecast comes as expectations of mega profits in the gas industry spark a political debate in Canberra. Climate groups, MPs and unions are pressing for higher taxes on multinational energy giants, arguing they should not benefit disproportionately from the global crisis that has increased the prices of petrol, diesel and other goods for Australian consumers.

The Albanian government had previously rejected a popular campaign by independent senator David Pocock to impose a 25 percent tax on gas export revenues.

Pocock said people of all political persuasions support Australians “getting a fairer return on the sale of our finite resource”. He accused the government of “caving to vested interests” and promised to redouble efforts with advertising targeting Labour’s national conference in Adelaide from 23 July.

“The huge wartime revenues of gas companies underscore once again how we as Australians have missed the opportunity to earn a fair return from the sale of our limited resources,” he said. “Our gas tax campaign is not ending.”

Pocock went viral this year with a social media video in which he made a government official admit that the beer tax was expected to bring in $2.7 billion, while the federal offshore oil and gas tax (the Petroleum Resources Rent Tax (PRRT)) would bring in $1.5 billion.

The gas industry notes that PRRT is not the only tax it pays and that the total tax bill is much higher than that. In 2024-25, the industry contributed $21.9 billion in taxes and royalties paid to state and federal governments.

A government spokesman said Labor was designing the first national gas reservation policy, which would force LNG exporters to retain some of the gas for domestic use and offer the gas at “affordable prices”.

“Revenue from LNG exports is expected to increase in the short term due to high prices resulting from conflict in the Middle East, but is then expected to return to more sustainable levels over the outlook period as markets recover,” the spokesman said.

Although countries in Asia are paying top dollar to compete for spare Australian LNG cargoes to make up for lost supply from Qatar, LNG prices are likely to start falling again in the coming years. According to the report, Australia’s LNG earnings are expected to decrease to 41 billion dollars by 2031.

The increase in LNG prices since February is expected to increase the value of Australia’s thermal coal exports next year.

Reference prices for high-quality coal traded at the Port of Newcastle have already increased by 15 per cent to $135 per tonne, from the pre-conflict level of $117 per tonne. The ministry says this is a result of some countries firing up coal-fired power plants in their power grids to avoid using more gas-fired energy.

The country’s overall resource mining and energy export revenue is expected to total $416 billion in the 2026-27 financial year, up $42 billion in fiscal 2027 compared to previous forecasts, primarily driven by the Iran war driving up Australia’s gas, coal and gold prices.

“Export volumes remain strong, underlining Australia’s role as a reliable country
“We are a stable supplier of resources and energy to our export partners and the region,” said Resources Minister Madeleine King.

During the previous global energy shock in 2022 caused by Russia’s invasion of Ukraine, rising LNG prices contributed to sharp increases in domestic gas prices on Australia’s east coast; This caused the energy bills of homes and businesses to suddenly rise and increased inflation.

This time domestic gas prices remained stable and traded at levels below $10 per gigajoule, as before the war. Experts say prices have stabilized this year due to an influx of giant batteries and favorable weather conditions for renewable energy, suppressing demand for gas-fired power on the power grid and also putting more pressure on gas exporters from the government to ensure the local market is fully supplied before uncontracted, one-off cargoes are shipped to Asia.

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