Landmark NSW $2b gas deal was supposed to bring down prices but nothing has happened

A freezing winter, rising demand for gas and soaring prices — the squeeze on gas could have been avoided if the federal and state governments had followed on their deal.

Not a single molecule of extra gas has flowed into NSW as it struggles with a gas crisis — despite a much-touted $2 billion deal signed by former premier Gladys Berejiklian and the federal government.

In fact NSW was supposed to get an extra 70 petajoules into the market by 2022 — or trigger a special review.

As more families freeze in the face of spiking energy prices, none of the projects mentioned in the special Memorandum of Understanding signed in early 2020 have come on-board.

That’s despite a promise by the NSW government to “fast track/streamline” assessments for three projects — the Port Kembla and Newcastle import terminals — and the Narrabri gas project.

It comes as the clock is ticking on the state’s ageing coal-fired power plants, including Liddell slated to shut next year.

Energy Minister Matt Kean has been asked about what NSW has done to encourage gas investment, as laid out by the historic $2b deal. Picture NCA Newswire/ Gaye Gerard.

Gas is becoming crucial to providing reliable around-the-clock power to back up intermittent wind and solar — with new plants such as the Hunter Power Plant now being built.

But critics say NSW has squandered the deal which would have beefed up our supply by more than 50 per cent a year and averted the current power bill crisis.

Gas prices are increasing. Picture: Thinkstock

NSW gas explorer Asset Energy said the failure of the governments to achieve the outcomes set out in the official Memorandum of Understanding has left the state in the midst of an energy crisis — with no solution in sight.

When the ink was still wet on the deal, former PM Scott Morrison promised “you get more gas into the system, it drives down prices. What’s important is 70 petajoules of gas is on its way”.

Then Premier Gladys Berejiklian agreed, saying “a $2 billion dollar deal is nothing to sniff at”.

“The people of NSW who are wondering how to pay their off-the-charts energy bills have every right to ask why additional gas supply has not been delivered,” Asset Energy executive director David Breeze said.

The Liddell coal fired power station that is due to be closed next year. Picture: David Swift

“Had any of the three projects outlined in the MOU, and others including our own proposal to explore for gas 30km offshore from Newcastle, been delivered, NSW would not today be facing the gas shortages and high prices hurting our homes and businesses.

“Our project alone could provide NSW with 20 years’ worth of gas, which we have committed to being for domestic supply only.

“It is extraordinary that the government of NSW has failed to live up to its end of the MOU. “Surely it has a duty to do all in its power to provide viable and affordable energy supplies to businesses and householders.”

The firm says it would take just two years to deliver gas to market from completing a well, and would supply it at $8 a gigajoule – compared to the current price of around $40.

Last month NSW energy Minister, Matt Kean warned Sydney residents to cut their evening because of the fear of blackouts, before the national electricity market was suspended.

The operators of the Narrabri coal gas project have also called on the NSW government to fast-track a pipeline licence to bring forward their project to ease the energy crisis.

Santos chief executive Kevin Gallagher said if the government acted quickly the company could have gas running from Narrabri by 2025.

Mr Kean was asked for comment.

A Department of Planning and Environment spokesman responded that the Port Kembla Gas Terminal has received development approval, the Narrabri Gas Project has been approved by the Independent Planning Commission and the proponent of the Newcastle Gas Terminal is currently preparing an Environmental Impact Statement.

“A number of other gas infrastructure projects, including expansion of existing gas pipeline capacity, have been proposed that would also support increased gas supplies to NSW,” he said.

A spokeswoman for Federal Energy Minister Chris Bowen said the previous Government “left a patchwork of ad-hoc deals and empty promises”.

She said they were working through all the existing NSW bilateral energy and emissions reduction agreements and the issue would be discussed at the next energy minister’s meeting in August.