PERTH (miningweekly.com) – Federal Minister for Industry and Science Ed Husic has lashed out at the oil and gas sector, saying the industry was not taking supply concerns and rising energy prices seriously.

Speaking to the ABC RN Breakfast show earlier this week, Husic noted that while a heads of agreement (HoA) was signed with liquefied natural gas (LNG) producers earlier this year to prevent a gas supply shortfall and secure competitively priced gas for the domestic market, subsequent evidence has shown a continued increase in energy prices.

“I’m already picking up evidence that the contract offers post the HoA that we’ve signed are just as high if not higher than what was the case before the HoA,” Husic said during the interview.

“There is evidence that in some contracts that what’s being offered was higher than what was received pre HoA. And that says to me, and it’s typical - I think this is reflective of this fact, that the market the way it stands at the moment that the LNG exporters and their associates, as the Australian Consumer and Competition Commission (ACCC) has identified, they’ve got influence of close to 90% of the proven and probable reserves in this country.

“So, their view is they can keep doing what they’ve been doing even though the country, everyone, has been saying to them, “You’ve got to see sense. You’ve got to do better. There are implications and consequences of what you’re doing,” and they’re still not doing it,” Husic said.

The HoA put in place in September this year, and signed by three east coast LNG projects, was aimed at ensuring additional gas supply, improving security and affordability of domestic gas supplies in future years, while also introducing transparency measures to improve the information available to customers.

The HoA included LNG exporters first offering uncontracted gas to the domestic market, on competitive terms, before exporting, and that domestic gas customers would not pay more for the gas than international customers. The HoA also committed LNG exporters to offering gas on terms consistent with a code of conduct, and enhancing transparency and accountability, with quarterly compliance reporting to the Minister of Resources with oversight by the ACCC.

Husic said this week that the behaviour from the gas companies meant that the government had now reached a point where it was "forced" to consider a wide range of interventions to get a "better deal" because the LNG companies were “not doing the right thing”.

“And it’s been, as indicated by the ACCC – again, I come back to the stuff that they put out in the last few weeks – cases where the LNG exporters are offering gas to the domestic market at prices they couldn’t reasonably expect on the international market,” he added.

“And now we’ve got to go the next step in terms of further consideration about what we do to drive down input costs,” Husic said.

The Minister was unwilling to comment on what form the "next step" would be, saying the government would have to work through that "internally".

The Australian Petroleum Production & Exploration Association (Appea), which previously welcomed the HoA, called Husic’s comments ‘irresponsible’ saying he demonisded and misrepresented a leading industry which was critical to the national economy.

“Minister Husic has today continued his recent efforts of name-calling and sledging leading Australian businesses that support 80,000 workers and enable almost $500-billion of economic activity annually – not to mention supporting thousands of manufacturing jobs in his portfolio,” said Appea CEO Samantha McCulloch.

“It is easy to misrepresent how the gas market works, but the facts are that average domestic prices are well below international prices,” she said.

“While a range of prices can be offered to customers in direct negotiations, the average realised domestic prices reported by Appea members to the Australian Securities Exchange recently for the third quarter sit between $8.50/GJ and $13.10/GJ, well below the international market.

“It might not suit Minister Husic to recognise the complexity of our industry and of Australian gas markets, but he is ignoring the A$300-billion-plus investments the industry has made in the LNG sector in just over a decade that has created a world-leading economic powerhouse delivering billions of dollars of benefits to Australians.”

McCulloch said most businesses were on long-term contracts at lower prices given the way the wholesale gas market operated.

“Around 85% to 90% of the gas market is covered by long-term contracts which were offered in 2021 for this year – and locked in by many customers – at price levels of around A$6/GJ to $9/GJ,” she said.

“The remainder is covered by smaller, volatile spot price markets which for much of this year have been around 50-70% lower than those paid internationally.

“The industry has secured domestic supply and has worked tirelessly to get the gas to where it needs to go and ease pressures caused by a lack of policy support, bans and regulatory uncertainty for years in some jurisdictions; global energy market turmoil; and coal-generation outages and renewables failing to generate electricity during winter.”