Australia has granted approval to Woodside Energy’s proposal to extend the operational lifespan of its North West Shelf gas plant until the year 2070. 

This decision comes after an extensive six-year review process that was marked by considerable delays, multiple appeals, and strong opposition from environmental organisations, Reuters said in a report. 

The approval allows the continuation of operations at the significant natural gas facility located off the coast of Western Australia for an additional period, extending its initial planned decommissioning date. 

Review process

Woodside Energy, a major Australian petroleum and natural gas company, sought the extension for its flagship North West Shelf project, which has been a key supplier of liquefied natural gas (LNG) to global markets for decades. 

The lengthy review process involved rigorous environmental impact assessments and consideration of stakeholder concerns, including those raised by green groups who voiced concerns about the project’s long-term environmental implications and its contribution to greenhouse gas emissions. 

Despite these objections, the government ultimately sided with Woodside Energy, paving the way for continued gas production and export from the North West Shelf well into the latter half of the 21st century. 

The extension is expected to have significant implications for Australia’s energy sector, LNG exports, and its efforts to meet emissions reduction targets.

Located on Western Australia’s Burrup Peninsula, the North West Shelf facility stands as Australia’s largest and oldest liquefied natural gas plant, playing a crucial role in supplying Asian markets.

Environmental concerns

Environment Minister Murray Watt said in a statement that the approval for the project extension would include stringent conditions, especially concerning the impact of air emission levels.

Following the announcement, Woodside shares experienced a 4% surge in the afternoon, building on gains made throughout the trading day.

The current project approval is scheduled to expire in 2030.

Woodside submitted its extension application in 2018, which became subject to both state and federal reviews. This was due to conflicting priorities concerning energy security and the project’s environmental consequences.

Australia’s leading gas producer, Woodside, is establishing the foundation to connect new gas fields to its LNG plant through this extension. This development is projected to release as much as 4.3 billion metric tons of carbon emissions throughout its operational lifespan.

Government decision and partnerships

The Western Australia state government granted approval for the contentious project in December, a decision reached after an extensive review process that included the consideration of approximately 800 appeals submitted by environmental activists and concerned citizens. 

The sheer volume of appeals underscored the significant public interest and debate surrounding the proposed development. 

Prior to the federal general election held in May, the federal government exhibited a cautious approach to the project, twice postponing its final decision. 

Faced with declining production from its original offshore gas fields in the North West Shelf, a decades-long extension allows Woodside to proceed with the development of its long-dormant Browse offshore project, which will supply gas to the Karratha plant.

The North West Shelf venture is a partnership that includes Woodside and the following companies: BP, Chevron, Shell, Japan’s Mitsui & Co and Mitsubishi Corp, and China’s CNOOC.

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Elon Musk has publicly expressed his disapproval of President Donald Trump’s recently passed House tax bill, a sweeping piece of legislation that the billionaire entrepreneur says runs contrary to his own efforts to curtail government spending.

Musk’s critique adds a high-profile voice to the growing chorus of concerns surrounding the bill’s fiscal impact.

In an interview with CBS News, an excerpt of which was released Tuesday night, Musk, who recently announced he is stepping back from his role in the Department of Government Efficiency (DOGE)—a body that quickly became emblematic of the second Trump administration’s cost-cutting vision—did not mince words.

He stated he was “disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing.”

The full interview is scheduled to be broadcast on CBS Sunday Morning this weekend.

The legislation in question, frequently referred to by President Trump as his “big, beautiful bill,” encompasses a wide array of tax cuts.

Having narrowly passed the US House of Representatives last week, it now heads to the Senate for further deliberation.

Musk, the prominent chief executive officer of Tesla Inc. and SpaceX, appeared to align his concerns with those of some Republican lawmakers in both the House and Senate.

These legislators argue that the bill’s price tag is too high and are demanding more significant reductions in government spending to offset its cost.

Echoes of fiscal conservatism and legislative hurdles

The sentiment expressed by Musk mirrors the fiscal conservatism voiced by certain Republican factions.

Senator Ron Johnson, a Republican from Wisconsin, highlighted the considerable distance yet to be covered before the bill might find acceptance in the upper chamber.

When asked about a timeline for the Senate’s work, Johnson remarked, “We are so far away from an acceptable bill, it’s hard to say.”

However, the legislative path forward is complicated not only by calls for further cuts but also by opposition from other Republicans to existing provisions within the House version.

Some object to measures such as restrictions on Medicaid benefits and the proposed swift elimination of clean-energy tax incentives, indicating a challenging road ahead for the bill in the Senate.

Musk, offering his personal take on the ambitious legislation during the CBS interview, quipped, “I think a bill can be big or it can be beautiful, but I don’t know if it can be both. My personal opinion.”

This pithy remark encapsulates the tension between the bill’s expansive scope and its potential fiscal consequences.

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A fresh wave of volatility in Japan’s government bond market is unsettling investors worldwide, amid signs of weakening demand for long-dated debt and growing concern over the broader implications for global financial markets.

For decades, Japan’s $7.8 trillion bond market was viewed as one of the most stable in the world.

But that status is now in question. In recent weeks, auctions for 20- and 40-year Japanese government bonds have recorded some of their weakest demand in years.

The rout has intensified since US President Donald Trump reintroduced tariffs under his “Liberation Day” plan in April, adding pressure to already fragile global bond markets.

Yields on 40-year government bonds hit an all-time high of 3.689% last week and were last seen at 3.318%, nearly 70 basis points higher since the start of the year.

Similarly, 30-year yields have jumped more than 60 basis points to 2.914%, while 20-year notes are up over 50 basis points.

Why is demand for Japanese government bonds falling?

Much of the anxiety stems from the Bank of Japan’s ongoing efforts to reduce its outsized presence in the domestic bond market.

Japan’s central bank has long played a dominant role in the domestic bond market, amassing vast holdings of government debt as part of its fight against persistent deflation — a battle that began in the 1990s during what became known as the “Lost Decades.”

But with Japan now gradually emerging from deflation, the BOJ is shifting course.

No longer focused solely on economic stimulus, the central bank is moving to scale back its massive balance sheet.

After its holdings of government debt hit a record high in November 2023, the BOJ has since pared back by ¥21 trillion ($146 billion) and has been reducing its quarterly bond purchases by ¥400 billion.

Source: Bloomberg

The central bank scaling back its bond purchases has prompted a key question: who will step in to buy if not the BOJ?

A disappointing 20-year bond auction on May 20, followed by weak demand for 40-year bonds on May 28, have underscored the risks.

Japan’s Finance Ministry is now said to be seeking feedback from market participants on whether to adjust the issuance of longer-maturity debt, highlighting rising concerns within government circles.

Investors are increasingly nervous that Japan’s bond market woes could set off a global ripple effect, particularly through the channel of capital flows.

Rising yields spark fears of Japan offloading US bonds

The sharp uptick in Japanese yields threatens to undermine the popular yen carry trade, in which investors borrow in low-yielding yen to invest in higher-returning foreign assets, often in the US.

Deutsche Bank AG has warned that rising Japanese yields would make bonds more attractive to local buyers and, as a result, could cause investors to pull out money from US debt.

According to Macquarie analysts, a “trigger point” may emerge where the yield gap closes enough to make domestic bonds more attractive than US assets.

Societe Generale strategist Albert Edwards warned in a CNBC report that such a development could spark a “global financial market Armageddon,” particularly if it hits US technology stocks, which have benefited from strong Japanese investor inflows.

The strengthening yen — up more than 8% this year — would only accelerate the shift.

“Tightening global liquidity will reduce world growth to 1% and by raising long term rates it will tighten financial conditions and extend the bear market in most assets,” he said.

This repatriation of funds to Japan is synonymous with the “end of US exceptionalism” and is mirrored elsewhere in Europe & China,” Roche added.

Source: Bloomberg

Strategists fear repeat of August’s carry trade unwind

The last major unwind in yen carry trades occurred in August 2024, when the BOJ surprised markets by raising interest rates.

The yen surged, and global markets slumped as investors rushed to close out positions.

Now, some strategists fear a repeat.

Natixis economist Alicia García-Herrero said the coming unwind may be even worse.

However, others suggest that the carry trade this time is on shakier ground to begin with.

Guy Stear at Amundi points out that the yield differential between Japanese and US 2-year bonds has narrowed from 450 basis points last year to around 320 basis points now, making the incentive for shorting the yen less compelling.

“Big carry positions typically build up when there is a strong FX trend, or very low FX volatility, and [when] there is a big short term interest rate differential,” said Guy Stear, head of developed markets research at Amundi. 

Riccardo Rebonato, professor of finance at EDHEC Business School told CNBC he saw a “progressive erosion” over a long period of time rather than an implosion.

US asset exposure still favours equities

Despite rising fears of a capital pullback, some analysts believe Japan’s large holdings of US Treasuries — long seen as a stabilizing force — are unlikely to be dumped en masse.

Masahiko Loo of State Street Global Advisors said these holdings are “structural” and part of the broader US-Japan alliance.

Data from State Street also show that Japan’s exposure to US assets is heavily tilted toward equities, with nearly $18.5 trillion in stocks compared to $7.2 trillion in Treasuries.

According to Apollo’s chief economist Torsten Slok, any capital flight would likely begin with equities, then move to corporate bonds — not Treasuries.

Still, concerns about Japan’s ballooning debt remain.

Prime Minister Shigeru Ishiba recently compared the country’s fiscal position to that of Greece, sparking renewed scrutiny over whether the government can sustain rising borrowing costs.

All eyes on the BoJ to turn things around

In a sign of growing pressure, major life insurers and pension funds have asked the Bank of Japan to take stronger action to stabilize the bond market.

The BOJ is set to review its bond purchase plans in June, and Governor Kazuo Ueda has pledged to monitor market developments closely.

Meanwhile, the Finance Ministry’s move to consult market participants on super-long bond issuance signals that authorities are grappling with how to restore balance to a market once defined by stability.

With the prospect of capital flight, strained foreign exchange markets, and rising global yields, Japan’s bond market has transformed from a haven of calm into a potential source of global disruption.

Investors will be watching closely to see whether the world’s most indebted developed economy can weather the storm — or whether the fuse has already been lit.

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The national water regulator Ofwat has imposed a record £122.7 million penalty on Thames Water following two separate investigations into the company’s operations and dividend practices.

The fine, which is the largest ever issued by the regulator, includes £104.5 million for serious failings in the company’s wastewater management and a further £18.2 million for breaching rules around dividend payments.

Ofwat said the penalties were a response to “unacceptable” damage caused to the environment and customers, marking the first time it has fined a company over paying dividends regardless of performance.

Thames Water found guilty of failures in wastewater ops, and improper dividend payouts

The most serious penalty, amounting to £104.5 million, relates to multiple breaches connected to Thames Water’s wastewater operations.

The regulator found the company failed to properly build, maintain, and operate essential infrastructure, which led to repeated pollution incidents and service failures.

In addition, Ofwat imposed an £18.2 million fine for improper dividend payments made in October 2023 and March 2024.

The watchdog ruled that £37.5 million in interim dividends and a further £131.3 million paid to Thames Water Utilities Holdings Limited were in violation of regulatory guidelines.

The regulator highlighted that these payments were made despite the company being in significant financial difficulty, with Ofwat now placing Thames Water in a “cash lock up,” prohibiting further dividends without regulatory approval.

Significance of the penalty

Ofwat’s chief executive, David Black, strongly criticised the company’s conduct. “This is a clear-cut case where Thames Water has let down its customers and failed to protect the environment,” he said.

Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations.

Black added that Thames Water failed to propose any adequate redress package to address the environmental harm caused, leaving Ofwat no option but to impose significant financial penalties.

In response, a spokesperson for Thames Water stated the company “takes its responsibility towards the environment very seriously,” and noted that efforts are already underway to address storm overflow issues highlighted in the investigations.

They also defended the dividend payments, citing a review of the firm’s legal and regulatory obligations.

Environment secretary Steve Reed the government has launched the toughest crackdown on water companies in history.

“Last week we announced a record 81 criminal investigations have been launched into water companies. Today Ofwat announce the largest fine ever handed to a water company in history,” he said.

The era of profiting from failure is over. The Government is cleaning up our rivers, lakes and seas for good.

Mounting debt and risk of nationalisation continue to loom

The fines come as Thames Water struggles to remain solvent amid soaring debt, operational issues, and growing public scrutiny.

The company, which serves 16 million people across London and southern England, narrowly avoided de facto nationalisation earlier this year after securing a £3 billion emergency loan in February.

That deal allowed the company to continue operating for at least another year, giving it time to restructure its nearly £20 billion in debt.

However, the newly announced fines were not included in its financial planning for the next regulatory period, casting fresh doubt on its financial future.

The firm, which employs around 8,000 people and is responsible for supplying water to about a quarter of the UK’s population, had been forecast to run out of funds by March.

The emergency loan staved off immediate collapse, but some lenders opposed its terms, while critics, including Liberal Democrat MP Charlie Maynard, argued the loan was not in the public interest.

Customers are set to face a 31% rise in water bills from April.

Ofwat has clarified that the penalties announced this week will not impact customer bills.

As pressure mounts to clean up its operations and win back public trust, Thames Water must now balance financial survival with an urgent need to fix long-standing infrastructure issues and avoid further environmental damage.

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Despite mixed signals, gold saw some buyers emerge on Wednesday, partially recovering from the significant losses of the previous day.

However, strong bullish momentum remains absent, according to experts. 

“The uncertainty surrounding US President Donald Trump’s trade tariffs, US fiscal concerns, and geopolitical risks keep a lid on the market optimism, which, in turn, revive demand for the safe-haven bullion,” Haresh Menghani, editor at FXStreet, said in a report. 

Bets on further Federal Reserve rate cuts in 2025 provide a boost to gold, which does not generate income, Menghani added. 

At the time of writing, the most-active gold contract on COMEX was at $3,343.21 per ounce, up 0.4% from the previous close. 

Among other precious metals, silver prices on COMEX were up 0.5% at $33.472 per ounce. 

Dollar weighs on gold

Following better-than-expected US economic data released on Tuesday, the US Dollar (USD) has gained positive momentum for the second consecutive day.

Gold fell sharply over the last couple of sessions and dropped below $3,300 in early European trade. 

It has now given back most of its gains from Friday, when it rallied sharply on news that Trump was hitting the European Union with a fresh 50% tariff. 

Gold’s pullback earlier this week came as the Trump administration postponed those tariffs for five weeks.

Over the past two weeks, the dollar Index experienced a consistent decline.

However, trading over the past couple of days saw a reversal, with the index finding support and making gains against various currencies in early trade.

A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers, thereby limiting demand. 

David Morrison, senior market analyst at Trade Nation, said:

Despite this, overall dollar weakness along with market uncertainty has kept gold on traders’ radars as a preferred defensive asset.

Economic data

April saw a notable 6.3% drop in US Durable Goods Orders, according to a Tuesday report from the Census Bureau. 

This contrasts sharply with the prior month’s revised 7.6% growth (originally reported as 9.2%) but was less severe than the anticipated 7.9% decrease. 

Excluding transportation, orders saw a modest increase of 0.2% in April.

Moreover, following a sustained decrease since December 2024, the Conference Board’s US Consumer Confidence Index experienced a significant rebound in May, reaching 98. 

This 12.3-point surge from April’s 85.7 marks the largest monthly gain in four years. 

The increase reflects a more positive economic and labor market outlook, supported by the US-China trade truce, which strengthened the dollar and weighed on gold and silver.

Meanwhile, the market anticipates at least two 25 basis point interest rate reductions by the Federal Reserve in 2025, as reflected in current trader pricing.

“Traders now look forward to the release of FOMC meeting minutes for cues about the future rate-cut path, which will play a key role in influencing the USD and providing some meaningful impetus to the non-yielding yellow metal,” Menghani said. 

Technical outlook

“Looking at the daily chart, the 50-day moving average has acted as support since the beginning of this year,” Morrison said. 

The 50-day is currently around $3,250, so it should be worth keeping this area in mind if gold were to pull back further.

Bearish traders found a key trigger in the overnight breakdown below a short-term ascending trend line.

Further selling below the 200-period simple moving average (SMA) and confirmation under $3,300 would strengthen the negative outlook, according to FXStreet.

Following any decline, buyers might be drawn in, with solid support expected around the $3,250-$3,245 horizontal range.

On the other hand, following momentum that extended beyond today’s Asian session high, near $3,315-3,316, the price now appears to be facing resistance around the $3,340-3,345 level.

Menghani said:

The latter coincides with the ascending trend-line breakpoint, above which a fresh bout of a short-covering could lift the Gold price to over a two-week high, around the $3,365-3,366 zone touched last Friday.

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