PERTH (miningweekly.com) – Federal Resources Minister Madeleine King on Thursday said that the Australian Domestic Gas Security Mechanism (ADGSM) would be a "measure of last resort" to ensure domestic gas supply.
The government is currently working on reforms to the ADGSM, which will ensure Australia has sufficient gas to meet domestic demand, while protecting long-term international contracts.
Reforms to the mechanism, due to start on April 1, will ensure the government has more flexibility to use the mechanism, if needed, in the event of a forecast shortfall in domestic supply.
Speaking at the AOG Energy expo, in Perth, King said the government had worked closely with industry and market advisory bodies on the implementation detail of these reforms.
“I want to assure you the ADGSM remains a measure of last resort. I am committed to working with industry to find commercial solutions to the challenges we encounter just as I did last year when we secured a new heads of agreement with East Coast liquefied natural gas (LNG) exporters to prevent a gas supplier shortfall on the East Coast.
“The agreement ensured additional gas supply, improved security and affordability of domestic gas supplies in future years, and also introduced transparency measures to improve the information available to customers.
“I know there have been challenging times with the introduction of a price cap to bring a halt to the skyrocketing gas prices that have become unsustainable for the community and manufacturers again on the east coast of the country. But thanks to the combination of actions this government took, there are now some positive signs to be found,” King said.
King’s comments come shortly following the release of a report by the Australian Energy Market Operator (AEMO) in which it has urged for more investment into gas production to meet energy demands post 2027, and has warned of potential supply shortfalls this winter in the southern states of Australia, under certain conditions.
In its 2023 Gas Statement of Opportunities (GSOO) report for central and eastern Australia, AEMO noted that investment in the gas sector would be needed in the near term to ensure operational solutions from 2027, despite falling gas consumption.
King on Thursday said that while some sectors had called for an immediate ban on future gas exports, the cancelling of long-term contracts with international energy partners would not be considered.
“These options are irresponsible and will not be countenanced by the government. The sovereign risks created by any such acts will be untenable and economy wrecking. After all, we must recognise that our current energy trading partners are the same countries and companies we will need to help drive energy transformation both here and abroad.
“One of our key objectives is for Australia to remain a stable and reliable energy supplier to both our domestic industries and regional partners. Australia is one of the world's largest LNG exporters accounting for about 20% of global LNG exports. We are well positioned to meet future gas demand in Asia while working toward net zero by 2050.
“This position of strength will help to meet not only Australia's climate commitments, but those of our neighbours, as well as enhance our international reputation, attract green investment, drive emissions reduction, and maintain international competitiveness of our industries,” King said.