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Coal attack hides Big Oil's woes

YOU know you're winning an argument when the other side turns nasty, and while Hogsback has seen ...

Staff Reporter

Stunts and false claims in the name of the environment have been well documented so there’s not much point in re-hashing those, except to say that Australia’s rising volumes of coal exports must be really annoying to dark green activists.

A lot more can be said about the gas industry which used its annual conference in Paris to launch a surprise attack on coal, a development which raised many more questions about gas than it did about coal.

“The enemy is coal” were the four most regrettable words used at the World Gas Conference.

“Our (gas) industry has historically been too timid to address the shortcomings of coal, but now it’s time for us to stand up and we need to stand united,” were in the same vein though they came from someone who could have reason to regret what he said.

Author of the first four regrettable words was Patrick Pouyanne, CEO of Total, a big French oil and gas company, and a man who is obviously annoyed that the prices of oil and gas have crashed during his turn at the helm.

Falling profits, and they are falling sharply at Total, are almost certainly behind Pouyanne’s coal attack as he flops around looking for someone to blame for his company’s poor financial performance which includes a loss of $US5.7 billion in the fourth quarter of last year compared with a profit of $2.2 billion in the same quarter a year earlier.

Total’s financial problems are not unique. Every energy-producing company in the world is feeling the chilly blast of lower prices, tumbling profits and asset-value write-downs.

But what Pouyanne did in Paris was join the game of demonising coal as a way of deflecting attention from the poor performance of the oil and gas industry by blaming it on coal.

An attack by a French oil company is bad enough, but the second quote came from an Australian oil man who appears to have been thinking along the lines of “when in France, do what the French do”

Woodside Petroleum CEO Peter Coleman was the man who called for a united stand by the gas industry against coal; and while there’s no doubt the cheers from the crowd felt good at the time they probably do not feel so good today.

There are four reasons for Coleman wondering why he stuck his neck out so far in Paris, a city once famous for removing the heads of people with exposed necks.

The first is that the Australian government and the Opposition are extremely annoyed that a prominent businessman would try and damage one of the country’s biggest export industries and employer of 55,000 workers.

The second is that by attacking coal the Woodside boss has raised questions in the minds of investors about whether his company is starting to suffer from the same problem of falling profits as those hitting Total.

The third is that Coleman might have let a cat out of the bag, a cat called Jim Chanos, the man who famously warned investors last month that LNG, Woodside’s primary profit spinner, is “a disaster waiting to happen”

The fourth reason for regret is that Coleman has earned the ire of a business partner and the boss of Australia’s biggest resources company, BHP Billiton’s Andrew Mackenzie.

Over the next few weeks Coleman will be called to account by his masters, the directors of Woodside, to explain why in one outburst at a Paris conference he succeeded in riling the government, the opposition, investors and a major business partner.

All that the Woodside CEO achieved is that he has turned himself into a poster boy for the environmental lobby which will promote his comments at every opportunity during its campaigns against coal.

If anyone at Woodside doubts that a monumental blooper was committed in Paris they need only consider the advice of their former colleague and now Opposition spokesman for resources, Gary Gray.

“It is not wise for companies or their leaders to wage war on any one energy source, or talk down the prospects of one source of Australian exports,” Gray said.

Mackenzie, who has a seat on the board of the North West Shelf gas project alongside Coleman said much the same thing about the Paris attacks on coal: “Look, this is a little unfair. There’s an element of truth to what people are doing but it’s grossly exaggerated and it lacks perspective.”

Coleman, in order to impress an audience of gas producers in Paris, has alienated some of the most important people in Australia, including those who have a say in the future of Woodside.

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