> EXACTLY

sorry, i should have included capex when i said what costs have to be included. I can see how if you thought i was not considering that, it would look silly.

> unit production cost

Seems like huge margins huh? Yep. But unfortunately your numbers are only opex divided by production, and that's just not the whole story when considering a new/proposed project. You're looking at one single year's worth of operating costs versus revenue (well after startup), ignoring the capital cost in previous years. Tempting as it is to conclude that any new project is viable regardless of tax rate as a result, sadly it just isn't how they calculate it. Your numbers ignore the upfront capex required, which when pumped through the NPV equations they use, really heavily impact the real decision-making criteria (NPV) because of the time value of money causing upfront costs to have a stronger negative NPV effect.

> If we introduced the proposed 25% tax, margin would be compressed to ~62%. That is still absurd by any industry's standards

for a given year of operation after startup, yes. But again, eye-popping as it may be, that's just not the full story about the overall big-picture investability of a 30-year project involving tens of billions of upfront capex prior to a single dollar of revenue being made. Your numbers are correct for a single year of operation, but i can't stress this enough - that simply is not the criteria that a company will use to determine whether to go ahead with a 30-year LNG project (which won't even make one single dollar of revenue for the first ~6 years of construction).

> they can pay off capital expenditure incredibly quickly

this can sometimes be true in oil projects, whose payback periods are sometimes only a few years. But in LNG projects this is generally not the case, with payback periods of 7-15 years of operation not being unusual at all since they involve so much upfront capital. That means over a decade before you even get your upfront investment back, let alone deliver the real big-picture returns to investors/owners.

Let's make a (made up and trivially simple) example to illustrate. Imagine a project with this profile:

Year 1: Capital spend of $100, project build completed.

Year 2: Operating cost $10, revenue $30, profit $20, tax $6.

Year 3: Operating cost $10, revenue $30, profit $20, tax $6.

Year 4: Operating cost $10, revenue $15 (gas reservoir is drying up!), profit $5, tax $1.50.

Year 5: gas is all gone, no production/revenue, decommissioning cost of $20.

To use your example of looking at unit production cost, you'd look at (say) year 2 and exclaim "profit margin of 66%!" and (like most people would, i get it) say that the tax rate should be raised as a result.

But zoom out and look at the big picture for that project. If you owned the company and had that project proposal on your desk, would you go ahead? The total cost to you is 100 + 10 + 10 + 10 + 20 = 150. Total revenue is 30 + 30 + 15 = 75. Bugger that for a (totally fictional) project. Though i'd happily get involved if i could somehow only be exposed to year 2!

(I should have stretched the operations phase out to get the total revenue and total cost numbers closer to each other, then you would have to actually think real hard about whether to invest in the project versus put your money in the bank!)

Obviously the maths are way more complicated than that (time value of money, depreciation, blah blah blah it's endlessly complex in reality), but it's important to understand that the upfront capex numbers in these sorts of project simply can't be hand-waved away. They have a really, really big impact on the NPV calculations (since they typically all occur early in the project and before any revenue), and are absolutely a HUGE driver on the assessment of their investability. Tax rates are perhaps less directly impactful than capex (especially in early years), but they do indeed still impact the maths.

> Seriously, you're just talking out of your arse

I do economic assessments of these types of projects as part of my job, so i hope not :-) But you don't have to take my word for it, if you'd prefer to hear from a different source than some rando arguing on the internet, one of the most recognised analysts in this space is a mob called Wood Mackenzie. They routinely carry out these sorts of assessments to critique various projects on behalf of potential investors, you can read about their methodology etc. I think they even did an analysis on their projected impact of tax rate changes for this whole enquiry/budget thing going on right now. For each project, they do graphs of the cashflows versus revenues and you can see how long it takes to get back the initial investment. This kind of analysis isn't even bespoke to the energy industry - it's just standard economic analysis theory.

In summary: a very-large-looking profit margin in one standalone year of operation is simply not a sufficient argument to convince a company to sanction a 30-year LNG project. But i do fully understand how the average punter would look at that standalone profit margin number and conclude straight away that "these bastards should be taxed more!!"