How Resource Giants Minimize Australian Gas Export Taxes

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An ABC investigation reveals how Australia’s gas industry giants are exploiting Singapore’s low-tax environment to significantly reduce their tax liabilities, as the country grapples with rising domestic energy costs and renewed calls for a windfall tax on gas exports.

Australia’s Gas Exports: How Singapore Becomes a Tax Haven

Every week, tanker ships loaded with liquefied natural gas (LNG) depart from Australian ports such as Curtis Island, near Gladstone, bound for Asia. The gas is extracted, processed, and liquefied in Australia, but before reaching its final destination, ownership of the cargo often transfers to a subsidiary of the same company—this time based in Singapore. The result? Billions of dollars in profits are generated and taxed in one of the world’s most business-friendly, low-tax jurisdictions, rather than in Australia.

Shell, the world’s largest LNG trader, is at the center of this practice. Over the eight years to 2024, Shell’s LNG trading and marketing arm in Singapore made billions in profit by purchasing gas from producer countries like Australia and reselling it at a substantial mark-up. Financial records show that Shell’s Singapore branch paid $83 billion for LNG over this period, with much of that profit generated through these “paper trades”—transactions that may never involve physical movement of the gas.

Jim Killaly, a former deputy commissioner at the Australian Taxation Office, describes the practice as “a bit like taking money out of one pocket and putting it into your other pocket.” However, when done between companies in different jurisdictions, the effect is a significant reduction in tax paid to Australia.

Singapore: The Global LNG Trading Hub

Singapore’s role in the global LNG trade has grown exponentially over the past decade. Saul Kavonic, head of energy research at MST Financial, notes that Singapore is now the main LNG trading hub in Asia, offering a range of services, legal expertise, and a regulatory environment that facilitates such trades. While Singapore does use LNG, most of the gas traded there never physically enters the country. As Puah Kok Keong, head of Singapore’s Energy Market Authority, acknowledges, “The amount of trading done for LNG is actually more in terms of paper trades.”

The scale of these trades is staggering. Singaporean government figures for 2022 show that the value of LNG trades far exceeded the value of actual imports, highlighting the dominance of paper transactions in the global LNG market.

Tax Evasion or Legitimate Business Practice?

Critics argue that this practice allows multinational companies to minimize their tax obligations in Australia, where domestic consumers face soaring energy prices. The ABC’s investigation underscores how complex corporate structures and international trading hubs can be used to shift profits away from countries where the resources are extracted.

As Australia debates whether to introduce a 25% tax on gas exports—a proposal supported by a majority of voters but opposed by energy companies and the current government—the revelation of these tax avoidance tactics adds further urgency to the discussion. Economists and policy analysts have long argued that Australia’s current tax system on gas exports is ineffective, with generous deductions and “uplifts” allowing companies to pay little or no tax on their profits.

What Comes Next?

With the federal budget due next week, the issue of gas taxation is likely to remain a contentious one. The ABC’s findings raise questions about whether Australia’s tax system is fit for purpose in the face of such sophisticated corporate strategies. As the debate continues, the spotlight remains on how to ensure that the profits from Australia’s vast natural gas reserves contribute more effectively to the national economy and the cost of living for its citizens.

This article is based on verified reporting from ABC News and adheres strictly to the provided source material. No claims, quotes, or specific figures are included that are not directly supported by the primary source.