Shell Australia country chair Cecile Wake said higher taxes on exporters would undermine investment signals and weigh on incentives to produce incremental volumes.
Less supply would push prices higher as structural shortfalls were forecast in southern states, Ms Wake told a snap parliamentary inquiry into gas export taxes on Wednesday.
"That, in itself, drives prices higher and will reduce our energy security," she said.
"If you reduce investment activity, you reduce gas supply; the outcome of that will be higher domestic prices for end users."
Ms Wake fronted the inquiry against the backdrop of growing momentum for a tougher levy regime for gas exporters, with a flat 25 per cent tax on revenues generating the most attention.
Several crossbenchers, as well as Liberal industry spokesman Andrew Hastie, Commonwealth Bank chief executive Matt Comyn and Labor backbencher Ed Husic, support raising taxes on gas exporters in the May budget.
Climate Councillor and former BP Australasia president Greg Bourne has urged the federal government to ignore industry threats to walk away under a tougher tax regime.
He says gas exporter leverage has eroded and viable projects are becoming increasingly scarce, with demand for fossil fuels set to wane in coming decades as the world transitions to clean energy sources.
The shortcomings of the Petroleum Resources Rent Tax, the federal mechanism for taxing resource profits for the gas industry, were well canvassed in the first batch of hearings.
Critics say the tax is poorly structured for modern LNG projects as it allows overly generous deductions for capital expenditure.
Shell Australia paid $109 million in PRRT last financial year, Ms Wake said, and has not paid any in the past decade while projects were under construction.
The company is presently paying the federal tax on the Gorgon project and expects to pay the levy on the Prelude facility from 2027.
The industry claims its overall tax burden is significant, totalling $22 billion in 2024/25 when all levies and royalties are considered.
The Business Council of Australia, representing big corporates, does not support proposals to increase the tax burden on the gas sector.
Pushed on views on tax settings among members outside the gas industry, chief executive Bran Black said it was about striking a balance.
"I appreciate, on the one hand, that everyone wants to see lower prices," he told the inquiry.
Affordability for gas users was why the industry group supported a prospective domestic reservation scheme, he said.
"But on the other hand, you've got to think through what are the long-term consequences of the policy choices that we make," Mr Black said.
"What we've heard directly from our own engagement is that if we undermine the assumptions that have led to very significant capital investments being made, we won't get further capital investments of that nature."
The result would be less supply and reduced scope for growth, he said.
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