PERTH (miningweekly.com) – The Australian Petroleum Production and Exploration Association (Appea) has called on the federal government to prioritise bringing on new gas supply rather than compromising international partnerships with export rule changes and risking the economic benefits of these exports.
In its submission to the Australian Domestic Gas Security Mechanism (ADGSM) consultation, Appea said proposed changes risked undermining Australia’s role as a trusted trade and energy partner while doing nothing to address the underlying factors behind forecast domestic gas shortfalls.
Australian Resources Minister Madeleine King has previously said that 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.
The industry body warned that the proposed changes broadened Ministerial discretion to limit exports and could leave key trading partners such as Japan with as little as 30 days' notice for breaking critical gas contracts.
“Instead of addressing the root causes driving potential shortfalls, the proposals effectively export Australia’s domestic gas market uncertainty to the region,” Appea CEO Samantha McCulloch said.
“Importers of Australian natural gas are key investors in our energy industry and our economy more broadly. These nations are also our diplomatic and national security partners in the region.
“The government’s domestic market interventions, including ongoing price regulation, have created a lot of uncertainty and are already impacting new domestic gas supply, the opposite of what the Australian Competition and Consumer Commission (ACCC) says is needed.
“In the next stage of these cascading interventions, the government is proposing to disrupt gas export contracts to our important allies in Asia.
“The industry is committed to ensuring domestic supply and exports are a key part of this, with liquefied natural gas (LNG) contracts in many cases supporting the economics of new domestic gas supply, while delivering billions of dollars to the Australian economy.”
Appea has recommended that the government prioritise increasing domestic gas supply in line with recent ACCC recommendations.
“The government is squeezing gas supply which independent research has found will increase the pressure on the budgets of households and businesses,” McCulloch said.
“More investment in natural gas is the best and most enduring way to ensure energy security and to put downward pressure on household bills.”
McCulloch said the procedures for triggering the ADGSM must be more robust and objective, minimising Ministerial discretion and maximising notice provided to LNG producers and customers. Any shortfall assessment must be objective and transparent, she added.
“Further, the ADGSM reforms cannot be considered in isolation and must align with the ongoing Heads of Agreement and Code of Conduct discussions and processes,” she said.