Origin Energy’s APLNG and Shell’s QCLNG promise to boost supply as PM Malcolm Turnbull threatens government intervention

AUSTRALIA’S gas producers have been put on notice to pump more supplies into the domestic market or risk government intervention.

Minister for the Environment and Energy Josh Frydenberg, with PM Malcolm Turnbull and the Minister for Industry, Innovation and Science, Senator Arthur Sinodinos, at a press conference at Parliament House in Canberra after a roundtable with the Gas Industry. Pic: Kym Smith

AUSTRALIA’S gas producers and multi-billion-dollar exporters have been put on notice to pump more supplies into the domestic market or risk government intervention.

Prime Minister Malcolm Turnbull on Wednesday warned the Government would not shirk from using its powers to ensure Australians had access to reliable, secure and affordable gas. National gas producers promised to increase supplies, but, in a major move for Queensland, two of Gladstone’s major liquefied natural gas (LNG) exporters agreed to become net domestic gas contributors, putting more gas into the domestic market then they take out of it.

Queensland’s rapidly expanding LNG exports have been blamed for sucking up domestic supplies to meet long-term export contracts, driving up local prices for electricity generators, industry and domestic use.

Origin and ConocoPhillips-owned Australia Pacific LNG and Shell-owned QGC (which operates QCLNG) agreed to the deal as part of their social licence.

Shell Australia chairman Andrew Smith said the QGC project had already reduced LNG export shipments to supply the domestic market.

“We understand that if we want a long-term export industry we need to make sure Australians have gas available at competitive prices,” Mr Smith said. Gladstone’s third LNG exporter, the Santos-owned GLNG, took the matter on notice. The Australian Energy Market Operator last week warned Australia faced a shortage of gas that risked energy supply.

Shell Australia chairman Andrew Smith arriving for Wednesday’s meeting in Camberra.

Mr Turnbull did not guarantee prices would fall and refused to say whether a gas reservation remained on the table, but repeated a strongly worded warning to the industry. “The considerable powers the Commonwealth has, we would never shirk from using in the national interest,” he said.

Opposition energy spokesman Mark Butler said Mr Turnbull was all talk and no action and needed to adopt a national interest test or gas reservation policy.

“This is a crisis being caused by Australian gas being diverted from the domestic market and shipped offshore,” Mr Butler said.

Mr Turnbull also said gas moratoriums across Australia need to be lifted.

“We must continue the pressure on state and territory governments to revisit the restrictions on gas development and exploration,” Mr Turnbull said.

The Government and gas industry will meet again next month to review the agreed measures.