Photo by: Bloomberg
PERTH (miningweekly.com) – The federal government has opened the final consultation on the mandatory code of conduct (Gas Code) to secure more gas at reasonable prices for Australian consumers.
Following significant consultation with gas producers and users over previous months, the Gas Code improves upon the approach to implementing reasonable pricing outlined in the December 2022 consultation paper.
The Gas Code will ensure sufficient supply of Australian gas for Australian users at reasonable prices, give producers the certainty they need to invest in supply, and ensure Australia remains a reliable trading partner by allowing liquefied natural gas (LNG) producers to meet their export commitments, the government said in a joint ministerial statement.
The Gas Code will ensure domestic prices are reasonable by establishing a price anchor, or mechanism to drag prices down, through the combination of a price cap, which is to be set at A$12/GJ and subject to a review commencing by 1 July 2025, and a process for qualifying for exemptions from the price cap on the basis of making satisfactory Australian Competition and Consumer Commission (ACCC) and court enforceable supply commitments.
The Gas Code will also allow small producers of gas to be exempt from the price cap if they supply only the domestic market.
In addition, it will require all participants to abide by conduct provisions that will level the negotiating playing field between users and producers to deliver a better-functioning gas market.
The federal government at the end of last year introduced an emergency gas cap of A$12/GJ on un-contracted gas, stating that it would only be valid for a period of 12 months and that it would be reviewed mid-2023.
The government said this week that the Gas Code will be supported by a strong enforcement regime delivered by the ACCC, with a review to be undertaken no later than two years after coming into effect, to ensure the Gas Code remains effective and fit for purpose, the government stated.
The government is seeking views from gas market participants on the Gas Code, including the merits of the approach to reasonable pricing relative to the original framework proposed in December 2022, as well as submissions from large gas providers on the supply and price commitments they would be prepared to make in the context of the proposed exemption framework.
The consultation on the draft Gas Code will close for submissions on May 12.