In early 2022 the lobbying firm Dragoman met its client, the Northern Territory government, to discuss how to convince the federal government to support a vast new port and manufacturing hub in Darwin.
Now known as the Middle Arm sustainable development precinct, the hub will be a major manufacturing centre for gas, petrochemicals, blue and green hydrogen and critical minerals. The precinct is key to the territory’s ambition to develop its massive natural gas reserves in the Beetaloo basin and offshore.
With the federal election looming in May 2022, the lobbyists were keen to extract promises from the Coalition and Labor for the billions needed.
According to documents seen by Guardian Australia, at the meeting were the former Liberal minister Robert Hill, now “chairman of counsellors” at Dragoman, and the former Labor leader Simon Crean, who had previously been engaged by Dragoman to help the French government-owned submarine company Naval Group improve its image with Labor.
The new documents show how the Northern Territory government pursued a strategy to “influence the commonwealth government to support the establishment of gas-based manufacturing in the NT”.
Central to that was the appointment of a lobbying firm in the lead-up to the election that would provide “deep political insight, analysis and strategic guidance”.
This was viewed as an urgent task, with one email between senior NT bureaucrats in June 2021 noting: “We are about to start the political giving season!”
What was said by the former politicians at the May meeting is not recorded in the documents but the group discussed “potential alignments and leverages” – lobbyist speak for how to make the project appealing to both sides of politics.
The Coalition was onboard with a massive expansion of gas but for Labor it was more complex: it was promising more rapid reductions in Australia’s greenhouse emissions.
The strategy was a resounding success.
In the lead-up to the election the Morrison government committed $1.5bn to the Middle Arm project. A few days later Anthony Albanese followed suit. After Labor’s win, the October 2022 budget review statement confirmed the support with an equity investment in Middle Arm of $1.5bn.
Later this year the lobbyists, business figures and former politicians behind the push will pass another milestone in their quest to achieve one of the largest expansions of the fossil fuel industry in Australia’s history, when the NT government lodges its environmental impact assessment for the project.
But some environmentalists fear that the financial commitments of state and federal governments to the project, now more than $2bn, mean it is a done deal.
Supporters of the 1,500-hectare Middle Arm development proclaim it as the linchpin in the NT government’s ambitious economic expansion plans.
According to the marketing spiel, it’s “a globally competitive, sustainable development precinct for renewable hydrogen, carbon capture storage and minerals processing”.
But some environmental and Indigenous groups are concerned that Middle Arm, far from promoting sustainability, is simply a vast fossil fuel project that will lock Australia into gas production for 50 more years.
Hill told Guardian Australia he would not discuss clients’ or former clients’ business. Crean declined to comment.
The man with many hats
From the start of the Middle Arm project and its associated gas developments, there have been concerns about the potential for actual or perceived conflicts of interest by decision makers.
An interconnected group – lobbyists, former NT politicians and business figures with their roots in the gas industry – have propelled the project from a dream in 2012 to its likely realisation in the next year or so.
A key proponent of the development of gas in the territory is the chairman of the international advisory board at Dragoman, Andrew Liveris, an NT native who rose to be chief executive and chairman of the multinational Dow Chemicals.
Liveris wears many hats: his various roles include adviser to the Saudi royal family, board member of the kingdom’s oil and gas giant, Saudi Aramco, and deputy chair of the Australian-grown multinational Worley Parsons.
But he is perhaps best known for his role as an adviser on manufacturing policy to the Obama and Trump administrations, and to the Morrison government during the pandemic.
In 2020, as supply chains threatened to fracture and the economy went into freefall, the government established the Covid-19 recovery commission to help with the emergency response and appointed the former Fortescue Metals chief executive Nev Power as chair.
When the commission unveiled its plans for recovery, there was surprise from business and consternation from the environmental movement about its focus on gas over renewables, services or indeed any other industry.
Why did the Covid committee put so much emphasis on gas? Commentators quickly pointed to Power’s role as deputy chair of a gas exploration company, Strike Energy.
Power said at the time that any potential conflicts of interest within the commission were being managed sensibly.
“I feel very comfortable all of the legal processes are in place to manage that and the commissioners are very aware of their obligations here,” he told a Business News breakfast. “We’ve all made declarations because the commissioners are all active business people, that’s why the [prime minister] wants us there.”
Liveris – who, as chair of the government’s manufacturing council, had produced a report recommending extensive subsidies for new gas pipelines – also has industry ties.
Like other directors of Worley Parsons, he holds close to $250,000 in shares of the company, which specialises in building infrastructure for the mining and gas industry.
The declarations of interests by the members of the Covid commission and its associated manufacturing taskforce have never been made public and freedom of information requests to release them have been denied.
Liveris referred Guardian Australia’s queries to the NT government.
The former chief minister
The other key figure in the push to make Middle Arm a reality is Paul Henderson, the former Labor chief minister of the NT.
Before leaving the top job in 2012, Henderson secured two large gas projects near Middle Arm: Santos’s Darwin LNG plant and a $20bn investment by Inpex in the Ichthys LNG processing plant.
But even then he and Liveris saw Middle Arm as something bigger than just a gas terminal. Their vision was for “a whole new gas-based manufacturing industry in Northern Australia”, as the NT News reported.
Henderson is now a lobbyist with Bespoke Territory, a firm he set up with his former NT cabinet secretary Mike Burgess.
Bespoke Territory is believed to have a number of gas and mining clients, but because the NT government has no lobbyists register, unlike most other states and the federal government, it’s unclear whose interests it represents. Burgess says in his LinkedIn profile that his former firm, MNT Consulting, had advised the NT government on the gas market.
Henderson did not respond to phone calls or emails from the Guardian.
The Dragoman connection
A further link in the chain is the lobbying firm Dragoman.
In 2021 it was awarded the $96,000 contract with the NT Department of the Chief Minister to provide “political, policy and commercial intelligence support”.
The contract did not go to open tender and the documents show that when the NT government sought external advice on whether Dragoman was the right firm for the role, one of the people it approached for advice was Liveris. In early 2022, documents show, the contract was extended by $49,500 to fund Dragoman to continue its work in Canberra. The objective of the contract variation was to “secure and provide support for meetings with the key commonwealth ministers and shadow ministers, prior to the announcement of the commonwealth election in 2022”.
A spokesperson for the NT government said the Dragoman contract had been awarded “within Northern Territory government procurement procedures”.
Dragoman’s clients include Worley (where Liveris is deputy chair), as well as a company owned by the Saudi kingdom in the mining industry that is disclosed on the foreign influence register. Its chief executive, Tom Harley, formerly at BHP, has longstanding business ties to Liveris.
Harley said he could not discuss clients’ business because of confidentiality. “All of Dragoman’s work is conducted with careful regard for ethical principles and obligations,” he said.
The executive director of the Environment Centre NT, Kirsty Howey, says the connections between many of the key players involved in pursuing the Middle Arm project deserve much greater scrutiny.
“The cast of characters involved in securing the Middle Arm subsidy raises questions about potential conflicts of interests,” she says.
While there is no suggestion of wrongdoing by any of the individuals or organisations named in this article, Howey says that as a minimum, the NT should have a lobbyists register. She says the public has a right to know whose interests a person might be representing, particularly if the person is a former politician, staffer or public servant who might enjoy easier access to their former colleagues.
Gas-led recovery alive and well
The gas-led recovery faded from headlines with the Morrison government’s defeat in 2022. But it is alive and well in the NT.
In May 2020 Liveris and Henderson were asked by the Labor NT government to co-chair the territory’s reconstruction commission, with a brief to produce a blueprint to kickstart the NT economy.
A spokesperson for the NT government said an independent adviser had been engaged to oversee the conflict of interest framework during the operations of the commission.
“The members of the Territory Economic Reconstruction Commission signed a confidentiality and conflicts of interest deed, and a register was established and maintained listing conflicts of interests with the secretariat executive,” the spokesperson said.
“It is the department’s practice to keep declared conflicts of interest and deeds confidential.”
Since the end of a construction boom in the previous decade, the NT’s growth rate has fallen to 1.5% – below the national average. Investment and population continue to fall while unemployment is rising. The territory’s revenue position is vulnerable. Debt is expected to approach $16bn – double current levels – by 2030.
“Without sustained and courageous effort to grow the economy, economic decline will continue, resulting in falling relative living standards and challenging social cohesion,” the reconstruction commission said in its final report, released in December 2020.
“This is not business as usual – it requires a systemic shift in the role of government, from facilitating investment to one of actively pursuing and winning investment for the Territory.”
The commission recognised that decarbonisation of the world’s industries offered an opportunity. Yet it also urged the government to concentrate on areas where the territory was already strong: mining and energy (which already accounts for 27.5% of the economy), defence, tourism and agribusiness.
“Globally, the use of gas is expected to rise both as a feedstock and a source of power, and it is critical the Territory is ready to capitalise on the opportunity the Beetaloo Basin will bring to the economy, once commercial feasibility is proven,” its report said.
The NT government argues that the territory’s economic future depends partly on the expansion of the gas industry, with Middle Arm as a central pillar. But critics say carbon pollution from that expansion – taken at its highest estimates – would swamp any of Australia’s proposed emissions reduction targets.
In the language of its supporters, Middle Arm has now become a “sustainable” development: part of the “pathway to decarbonisation”.
One of the main justifications for the claim of sustainability is the giant carbon capture and storage project with a hub at Middle Arm and offshore storages, proposed by Santos and Inpex. The Santos project, which is projected to store 10m tonnes a year, will take CO2 from its Barossa gas field, as well as from industries at Middle Arm.
“A 10-megatonne CCS plant is incredibly ambitious,” says the Climate 200 convener, Simon Holmes à Court, of Santos’s plans.
“The Gorgon project [off the WA Pilbara coast] is only managing to capture 40% of reservoir gas and is performing well below what was promised. What happens if this CCS project doesn’t work?”
The NT government says it is working with the CSIRO and industry to develop a business case for the CCS hub at Middle Arm.
“Sustainable outcomes and environmental protection are at the core of precinct planning,” the spokesperson said.
The precinct was targeting industries “with an industrial ecological approach, including minerals processing, low-emissions gas manufacturing and hydrogen production,” they said.
They rejected any possible conflicts involved in the relationship of key advisers to Worley, noting it was Santos, not the government, that had the contract with Worley to design the CCS project.
Already too much invested?
In May the NT chief minister, Natasha Fyles, and minister for industry and mining, trade and investment, Nicole Manison, announced that the giant Beetaloo basin project would move from exploration to production.
Manison’s department is also the proponent of the Middle Arm development. Her most senior bureaucrat is Shaun Drabsch, a longtime Labor staffer. Just before he moved to the NT public service, he was a consultant to Santos, advising on regulation of the NT gas industry.
A spokesperson for the NT government said Drabsch had previously declared during a Senate inquiry that he had been employed as a consultant by Santos for a year.
Santos needs Middle Arm to go ahead because it is central to the viability of its planned CCS project, and the CCS project is essential to gaining approval for its gas developments in the NT.
The Middle Arm funding, secured by Dragoman’s lobbying, may mean there is already too much invested financially for any of these interrelated gas projects to be stopped and that viability depends on them all proceeding.
Companies associated with Liveris and Dragoman stand to be the big winners.
Worley has already won a contract to design and build Santos’s CCS plant. Environmentalists believe Saudi Aramco could also emerge as a key player in the NT gas expansion.
It has made no secret of its ambitions to expand into the Australian market, signing a memorandum of understanding with United Petroleum, which owns petrol stations and storage facilities. It has major contracts with Worley in the Middle East.
On 2 June Austrade hosted a meeting in Perth where local companies could meet Saudi Aramco.
“The forum will provide a platform for Australian exporters to gain first-hand understanding of Aramco, its business opportunities, and the pathway to access those opportunities,” Austrade said in its promotional material.
