Financial Risks and Government Guarantees
Northern Territory taxpayers might face a significant financial burden if a major player in the Beetaloo Basin fails to meet its obligations on a long-awaited fracking project. A potential $75 million liability has been outlined in the latest NT budget, highlighting the government’s commitment to supporting the venture.
The NT budget for the 2026-27 financial year reveals that the territory’s net debt is expected to reach $12.55 billion. This figure includes a guarantee from the NT government to Tamboran Resources’ lenders, should the American company’s Shenandoah South pilot project default and other guarantors fail to cover the costs.
Tamboran Resources is the leading entity in the Beetaloo Basin, located approximately 500 kilometers southeast of Darwin. The company is anticipated to start supplying gas to the NT market later this year. The guarantee was announced in September, when the NT government signed several agreements to facilitate new gas supplies from the Beetaloo Basin, which will require a new compression facility to transport the gas.
“The agreements include a guarantee from the [Northern] Territory government, for up to $75 million of Tamboran’s $90 million share of the $180 million debt financing for the Sturt Plateau compression facility,” the budget states. “The Territory [government] guarantees repayment of the loan to lenders if the project experiences default and the project and other guarantors are unable to repay.”
A spokesperson for Tamboran expressed confidence that the guarantee would not be needed, stating that the construction of the facility is within their forecasted cost and budget. They emphasized that the government’s guarantee was crucial in securing the debt facility required for the processing facility, which is essential for delivering gas into the Northern Territory gas network.
Political Support and Energy Needs
The Country Liberal Party (CLP) government has highlighted gas supply agreements with Tamboran and another fracking company, Beetaloo Energy, as vital to the territory’s energy needs. Power and Water Corporation, owned by the NT government, has been purchasing emergency gas from LNG exporters to maintain power supply after the Italian-owned Eni’s Blacktip gas field started declining in 2021.
Economic Perspectives and Concerns
Economist Rolf Gerritsen, an Emeritus Professor at Charles Darwin University, described the government’s guarantee as “unusual.” He suggested that it might be more of a publicity move than a serious budgetary commitment. “The guarantors for Tamboran would obviously be companies with deep pockets, and so the likelihood of that money being spent, I think, is very low,” he said.
Professor Gerritsen also suggested that the guarantee could be a strategy to expedite the project. On the other hand, Kirsty Howey, executive director of the Environment Centre NT, raised concerns about the $75 million guarantee for Tamboran. She pointed out that it raises questions about the project’s viability. “It’s an extraordinary thing to have a government stepping in to sure up a fracking project that can’t apparently stand on its own two feet,” she said.
Howey added that the guarantee highlights the economic risk of the project and the potential risks to the people of the Northern Territory if Tamboran defaults on the loans. “To be bankrolling a highly risky venture that can’t seem to reach financial final investment decision in its own right is an extraordinary thing to be asked to be doing,” she concluded.
