Shares of Australian LNG producers rose on May 8 after the government adopted more favorable-than-expected changes to petroleum tax, ensuring the load was shared across the industry and did not impact growth projects.

Woodside Energy Group Ltd., the country's biggest independent oil and gas producer, was trading 2.5% higher, while closest rival Santos Ltd. was up 1.5% as at 0249 GMT. Beach Energy Ltd. jumped 2.5%.

Over the weekend, Australia announced plans to change its Petroleum Resource Rent Tax (PRRT) to increase the tax paid by the offshore LNG industry, moves that should increase revenue by A$2.4 billion ($1.6 billion) over the next four fiscal years.

Treasurer Jim Chalmers said reviews found that aspects of the PRRT were better suited to oil projects than LNG projects, and the deductions cap and other changes would help address that.

"The deductions cap seems to have struck a good balance between sharing the load across industry, earning more cash tax for government, and not threatening economics of growth projects," analysts at Citi wrote in a note.

"The deductions cap only starts when a project has been producing for 7 years, so that the IRR (internal rate of return) of new projects isn't materially compromised, which is a relief for Browse and Scarborough."

Woodside's $12 billion Scarborough development is expected to start producing LNG only in 2026. The Browse project, estimated to cost $20.5 billion, is Australia's largest untapped gas resource.

"We will continue to engage constructively with the government on ways to support a functioning market and a positive investment climate for industry to deliver the energy Australians need," a Woodside spokesperson said.

Citi said this would likely be the last change to PRRT before the legislation expires in April 2026, when it may require an overhaul.

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