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Proposed gas pipeline sale raises national security risks: Senators

rex patrick
Centre Alliance senator Rex Patrick

Selling the company that operates Australia’s largest gas pipeline network to a Hong Kong-based investment company has serious national security implications with the potential for espionage and sabotage, according to two federal senators.

Selling the company that operates Australia’s largest gas pipeline network to a Hong Kong-based investment company has serious national security implications with the potential for espionage and sabotage, according to two federal senators.

Under this proposed deal, CKI, which describes itself as a global infrastructure company, plans to acquire APA Group, which owns and operates pipelines that transport more than half the gas used in Australia including the main pipeline network along the east coast.

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That’s been approved by the Australian Competition and Consumer Commission (ACCC), which found it would have no adverse impact on competition.

Now it goes to the Foreign Investment Review Board and Treasurer Josh Frydenberg for a final decision.

Centre Alliance senator Rex Patrick said this proposed takeover raised serious concerns for competition and national security.

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“APA Group has a monopoly over gas transmission in the east coast. Unfortunately, because of the way the law is defined, the ACCC were not able to recommend against the takeover because it was not creating a monopoly, rather simply preserving one,” he said.

“This means the decision now lies with the Foreign Investment Review Board.

“In my considered view, there are serious national security implications with any foreign entity owning critical infrastructure. Ownership provides day to day control of assets, an understanding of the asset including its weaknesses, the ability to ‘upgrade’ software and other controlling elements and, in the most extreme of circumstances, the facilitation of sabotage.”

Liberal senator Jim Molan said energy security was one of his principal concerns as a senator.

“In this time of strategic uncertainty and increasing great power rivalries, we need to be extremely wary of foreign efforts to attain control over Australia’s infrastructure assets,” he told Parliament this week.

“My concerns are threefold: they relate to concentrations of ownership, the potential for espionage and the potential for sabotage.

 “Approval of the deal would also lead to an alarming level of Chinese ownership of our national energy infrastructure.

“Should it proceed, Chinese interests would dominate electricity and gas transmission and distribution in most states. This is not an outcome that most Australians would welcome.

“The implications of permitting a single nation to exercise such a preponderant influence over Australia's energy assets are huge, especially when we consider China’s demonstrated willingness to interfere in Australia's internal affairs.”

Senator Molan said this would carry clear risks in relation to espionage and the transmission of sensitive information overseas.

In practice, it is almost impossible to prevent transmission of sensitive information and customer data to the owners of assets, he said.

This deal would increase our vulnerability to infrastructure sabotage.

“By deploying malware into the digital systems that control the networks, a hostile actor could wreak havoc. With the nature of 21st century digital systems, this could be done from outside Australia,” the senator said.

Senator Molan said Australia could not be comforted that CKI was a private firm from Hong Kong.

“We have seen the steady accumulation of Communist Party influence over Hong Kong since the handover in 1997 and companies in Hong Kong are increasingly subject to the dictates of the party,” he said.

“Furthermore, CKI’s considerable business activities on the Chinese mainland mean it is obliged to maintain a good relationship with the party. As a consequence, CKI is subject to the influence and coercive control of the Communist Party.”

Proposed gas pipeline sale raises national security risks: Senators
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