BUSINESS Mark Carnegie says gas is the best investment for the...

BUSINESS
Mark Carnegie says gas is the best investment for the future energy mix

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by Mark LudlowFebruary 8 2018 - 10:01AM
High-profile investor Mark Carnegie said he won't be investing in clean energy - or coal for that matter - but believes gas will be the crucial link as Australia moves towards a low-carbon energy sector.

With more than $35 million invested in a portfolio of assets in the gas sector, Mr Carnegie said he would not touch clean energy investments, such as wind, solar or other emerging technologies, saying Australia will never be able to compete against China, Germany or the United States when it comes to new technology.

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Venture capitalist Mark Carnegie says he believes gas will play a big role in the nation's future energy mix. Photo: Christopher Pearce
"Any investments in that area have tended to look like they should be coming out of my philanthropy account rather than my general investments. I really don't want to be able to compete against [Tesla chief executive] Elon Musk," Mr Carnegie said in an interview with The Australian Financial Review.

"Renewables are a government subsidy business. As shown by the big battery and Tesla, we are never going to be globally competitive in renewables. We can't build an industry on that."

Mr Carnegie - the venture capitalist who has investments in gas companies Armour Energy in Queensland and Strike Energy in South Australia as well as a 60 per cent stake in iPipe a pipeline construction and maintenance company - said gas had been forgotten in the current debate of coal versus renewables.

"This is a portfolio play we have. If you look at any of those trends, renewables are coming faster than anyone thinks and what is going to be compatible for renewables and it's gas. Gas is clearly the thing that works," he said.

"I don't think gas will disappear, I think gas will remain part of the mix. In the long term gas is going to be part of a compatible energy mix."

IPO for iPipe?
With the $80 billion liquified natural gas industry up and running in Queensland, Mr Carnegie is adamant there is a role for smaller players to help deliver gas for the domestic market, similar to the United States where independents make up 20 per cent of the market.

Brisbane-based iPipe this week signed a $200 million contract with Arrow Energy to help provide construction and maintenance services for Arrow Energy in the Surat Basin as it delivers its long-term gas supply agreement with Shell on its QCLNG project.

iPipe - which won the contract from a field of international competitors - said it would be able to help deliver significant production efficiencies and a reduction in costs for Arrow through their locally-developed technologies.

Mr Carnegie, the founding partner of MH Carnegie & Co., said he was hopeful iPipe's technology would have global applications which could take the company to the next level, including a potential public listing on the stock exchange.

The gas industry earned the ire of Prime Minister Malcolm Turnbull last year as LNG exports and a lack of supply pushed up gas prices. Mr Carnegie said this was more a reflection of a lack of reserves being opened up for exploration after well-targeted campaigns by environmental activists.

But he said he was not fussed about Victoria lifting its moratorium on on-shore gas exploration or NSW speeding up its approval processes to end potential gas shortages, saying Queensland and SA - where he has his investments - would be the biggest beneficiaries. The Queensland government has also opened up two big tenements for domestic use only.

"I think it's a great opportunity for Queensland and South Australia and Western Australia who can supply the domestic market. I think it's a great opportunity for the businesses I'm in," he said.

"I don't want it [lifting the moratorium] - me personally being a greedy capitalist bastard, I would like it to stay as it is. It's like that saying about the resources sector is you want to be the last guy to get a permit."

While Mr Carnegie will not invest in renewable energy, he is also steering clear of investment in the coal industry. He also side-steps questions on Adani's controversial $16.5 billion mega-mine in Central Queensland.

"I have no view - that's politics," he said.