PERTH (miningweekly.com) – The Australian Competition and Consumer Commission (ACCC) has warned that the high gas prices in the east coast of Australia remain a critical issue for domestic gas users, and could see commercial and industrial gas users move out of the region.

Speaking at the Australian Petroleum Production and Exploration Association (Appea) conference in Brisbane, ACCC chairperson Rod Sims noted that the Gas Inquiry 2017-20 interim report had shown that commercial and industrial Australian gas users would pay more than $9/GJ for gas this year, and some more than $11/GJ.

“Commercial and industrial gas users have been telling us for some time that at those gas prices, their operations are not sustainable in the medium to longer term,” Sims said.

“Businesses that rely heavily on gas are increasingly likely to relocate from the east coast or wind up their operations.”

Sims has urged natural gas producers to carry out planned investment in gas production, specifically in the southern states where future domestic gas prices would be dependent on supply.

“Also, as I have done for some time now, I urge state governments to play their role in providing access to gas resources by adopting policies that consider and manage the risks of individual gas development projects, rather than implementing blanket moratoria and regulatory restrictions,” he said.

Appea CEO Andrew McConville said on Thursday that actions taken by the Australian oil and gas industry to bring more gas into the domestic market would ensure gas supply until at least 2023.

“The ACCC finds that prices have eased since early 2017, with most price offers now in the range of $9/GJ to $11/GJ. Producers, particularly liquefied natural gas (LNG) producers have made significant volumes of additional gas available to the local market,” McConville said.

He noted that the September 2018 agreement between LNG producers and the Commonwealth ensured that any un-contracted gas was offered to domestic customers first.

“Following announcements in 2017 and 2018, there have been a significant number of new gas supply agreements in 2019 providing gas to domestic customers.

“The oil and gas industry announced billions of dollars in new investment in 2018 and beyond, to bring more gas into the market, supporting both domestic gas consumption and the gas export projects that are underpinning much of Australia’s economic growth.”

He pointed out that in the past two-and-a-half years, there have been significant announcements from Arrow Energy, Shell Australia, Senex, Cooper Energy, Strike Energy, Gladstone LNG, Australia Pacific LNG, Origin Energy and Santos to bring on new supply in various parts of eastern Australia.

“This means the industry continues to meet in full the commitments provided to the Australian government in 2017 and reaffirmed in 2018,” McConville said.

McConville echoed Sims’ concerns around the New South Wales’ and Victorian government’s continued restrictions on developing local gas resources, noting that importing gas from Queensland could add as much as A$2/GJ to A$4/GJ to the price paid by consumers in the southern states.

“The real answer to getting gas prices down is to support safe and responsible development of resources. Working together to make this happen should be the focus of government and industry, to support all Australian businesses that rely on sustainable gas supply.”