By Clyde Russell
ADELAIDE, May 15 (Reuters) - How can Australia's oil and gasindustry, on the cusp of becoming the world's largest exporterof liquefied natural gas (LNG), have failed so comprehensivelyin the public relations battle against environmental activists?
This was the question posed by Kevin Gallagher, chiefexecutive of Santos Ltd, the country's No. 2 oil andgas producer, to the annual conference of the AustralianPetroleum Production and Exploration Association.
It's taken several years, but the country's LNG producershave finally realised there is mounting public anger againsttheir industry, and they are very much on the back foot when itcomes to telling what they believe is a positive story.
The public relations problems for the industry have beenbrewing for several years, but have been greatly exacerbated inthe past year by a combination of factors.
These include sharply higher natural gas prices for domesticconsumers and a well-orchestrated campaign by green activistsagainst the industry.
This environmental campaign attacks the industry on severallevels, from claiming that onshore natural gas production isunsafe and will damage farmland, to articulating that the riseof Australia's LNG export industry has raised prices and starveddomestic consumers of supply, to drawing a direct link betweennatural gas production and climate change.
Not all of these arguments stand up to scrutiny, but theindustry has been slow to realise that relying on reasoned andscience-based arguments when its opponents are using populismand fear and outrage is a losing position.
What the industry has taken too long to realise is that inthe court of public opinion it doesn't matter that 13 differentgovernment inquiries have found that extracting natural gas issafe as long as it is properly regulated, if the populacebelieves the scare-mongering of activists and farmers.
A refusal to engage has cost the industry credibility, andrebuilding a public image of LNG producers as a valuablecontributor to society will take time, despite the $200 billionthe industry has invested over the past decade to build eightnew LNG projects.
Zoe Yujnovich, chairwoman of Royal Dutch Shell'soperations in Australia and also of APPEA, told the conferencethe industry was well received and respected in the largelyremote communities where its operations are located, butvilified and distrusted in Australia's large cities.
"So, a question we must answer is: Why is there such a gulfin perception from the regional areas where we operate to thecommentators and activists of the inner city who rely on ourproducts?" she said.
TIME TO ENGAGE
Yujnovich said the industry has been unwilling to engage inconversations with other Australians, and when it has, it haschosen to avoid challenging or confrontational dialogue.
In effect, the industry has sat in its ivory tower,believing that science backs its positions and that its productsprovide the energy the community needs.
It's this sort of disengagement that has allowed theindustry to be tarred with the narrative that it doesn'tcontribute its fair share of taxes, that it is sendingAustralians' natural resources offshore for its own profit, andthat it is responsible for surging domestic prices for naturalgas and electricity.
There is an element of truth to the pricing argument againstthe industry, insofar as the establishment of three LNG exportplants on the east coast in Queensland state has effectivelylinked the domestic natural gas price to Asian LNG prices.
Instead of recognising the issue, the industry pushed backagainst government plans to ensure that domestic gas supplyneeds were met before the demands of the LNG plants.
The industry has also been largely ineffectual in lobbyingthe various state and territory governments to open up moreonshore exploration areas and end bans that have been imposed.
The Australian states of New South Wales, Victoria andTasmania all have some form of ban or restriction on natural gasexploration and production, and the Northern Territory justlifted a ban on hydraulic fracturing after a government inquiryfound the risks could be managed.
There are several steps the Australian natural gas industrycan take to improve its public image and rebuild trust.
The first is to cooperate with each other to ensure thedomestic market is well supplied at prices that will allowindustrial companies to continue to be competitive, thuspreventing them from shifting operations offshore.
The second is to ensure that governments realise thatincreasing supply is a key way of delivering cheaper prices.
And the third is to do more than just engage communitieswhere they operate, but also to talk to people in the cities asto what the industry actually delivers, and what it can't.(Editing by Tom Hogue)
