PERTH (miningweekly.com) – Australian gas suppliers and users have finalised a new voluntary Code of Conduct that will help ensure that the market is operating fairly and in the best interests of all participants, helping users to get the best deal.
The finalisation of the voluntary Code to support the negotiation of gas supply agreements represents an important industry-led milestone under the gas-fired recovery, said Minister for Industry, Energy and Emissions Reduction, Angus Taylor.
The gas industry has now agreed to implement the Code.
“We know that a secure supply of gas is crucial to supporting jobs in Australia’s important energy-intensive industries that are the lifeblood of our economy and our regions,” Taylor said.
“This Code will help to level the playing field in the negotiation of gas supply agreements. Fortunately, Australian spot prices have remained 60% to 70% below international prices, meaning Australian users have access to internationally competitive prices even in light of the energy crisis in Europe.
“The development and implementation of the Code is a key step in ensuring affordability and reliability for Australian gas users. We expect all participants to step up and continue to behave in good faith throughout the life of the Code.
“The voluntary Code was not reached without extensive efforts from both sides of the gas sector, and the government recognises this historic agreement between users and suppliers who worked together for the future of Australia’s gas industry.”
The Code will apply to the negotiation of gas supply agreements in the east coast domestic market, and will provide standards to govern the conduct of gas suppliers in their interactions with gas consumers, pricing principles, referencing the Australian Competition and Consumer Commission (ACCC) liquefied natural gas (LNG) netback price series, increased transparency and certainty for gas consumers regarding negotiation processes, and an equitable dispute resolution process, overseen by the appointment of an independent arbiter.
The Code will also provide for a regular review process of the Code by an independent reviewer, and the promotion of good faith dealings between suppliers and consumers.
The Australian Petroleum Production & Exploration Association (Appea) said that the Code would increase transparency in negotiations, provide for additional dispute resolution processes and reaffirm good faith between the parties.
“Australian gas continues to flow to domestic customers, with a new GSA with a domestic customer effectively announced every three weeks this year. Since late 2012, more than 114 gas supply agreements have been signed and agreed with gas customers,” Appea CEO Andrew McConville said.
“The Code will provide an additional framework for negotiations for future supply.”
The Code has been developed through extensive collaboration and consultation over the past 12 months with representatives of commercial and industrial customers operating in Australia and with regular updates on progress to the government and the ACCC.
“We were able to accommodate the vast majority of requests from customers while working within the Australian government’s parameters for the Code which included that the Code should not regulate prices or contain anti-competitive provisions. We have also maintained a consistent approach with other voluntary Codes and, critically, ensuring the efficient operation of markets that will allow more gas to be developed for the very supply customers are seeking,” McConville said.
He noted that the Code would operate on top of the Heads of Agreement signed late last year, the Australian Domestic Gas Security Mechanism which is in place until 2023, the ACCC review of gas market supply which runs until 2025 and alongside the recent review of netback pricing and new transparency measures through the Energy National Cabinet Reform Committee.
In addition, members will continue to report on a range of supply factors to the ACCC and to inform Australian Energy Market Operator’s daily spot markets, the Gas Bulletin Board and the Gas Statement of Opportunities.
McConville said the industry also looked forward to working with the government on the further development of the Australian gas supply hub at Wallumbilla, as well as increasing supply and delivering more jobs through further investment.
“Our members have announced investments totaling more than A$27-billion this year alone, across Western Australia, the Northern Territory, Queensland, Victoria and South Australia,” he said.
“More investment means that we can deliver more gas, generate more jobs and continue to underpin Australian industry.”
The voluntary Code forms one part of the government’s gas-fired recovery measures that aim to unlock supply, deliver an efficient transportation network and empower consumers.
This follows on from recent announcements, including the delivery of the first full National Gas Infrastructure Plan and Future Gas Infrastructure Investment Framework to ensure more supply can be unlocked and delivered to where it is needed.
The Code will commence on 1 June 2022.