Morrison Government plans national gas reservation scheme
Australia’s gas supplies will be reserved for local use under a move to protect the country’s stocks and lower power bills. Scott Morrison’s plan for a national gas reservation scheme aims to put further pressure on Victoria’s ban on all new gas exploration projects.
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Australia’s gas supplies will be reserved for local use under a drastic move to shore up the country’s stocks and lower power bills by as much as $270 a year.
The Morrison Government will begin plans to establish a national gas reservation scheme as it looks to place further pressure on Victoria to end its ban on all new gas exploration projects.
The intervention comes as the Victorian spot price for gas is at near 10-year highs amid a state government review into its moratorium on conventional gas exploration.
The state faces possible winter gas shortages by 2023 unless more is found or imported, with depleting offshore fields and pipelines from the northern states needing expansions.
A review of an emergency trigger which can slash export levels of gas will also be brought forward, while the competition regulator will keep its increased powers to monitor and publish data on Australia’s gas market.
Federal Energy Minister Angus Taylor said Victoria hadn’t invested in ensuring energy was available when their consumers needed it and the Commonwealth needed to step in.
“Victoria uses up to three times the amount of gas during winter where capacity is tight even though they have substantial unexplored resources,” Mr Taylor said.
“We are concerned about the next three winters in Victoria where supply will be tight and Victoria will be reliant on Queensland gas.
“The Andrews Labor Government has a simple option available to them which they could do tomorrow to reduce the price of gas for Victorians: lift the moratorium on gas.”
Resources Minister Matt Canavan said Australia was the biggest exporter of liquefied natural gas but “it must return greater dividends to Australians”.
It is not known how much of the country’s gas stocks will be reserved for local use under the plan, with the government committing to come to a decision by February 2021.
Under Western Australia’s gas reservation scheme, 15 per cent of all the gas produced in that state has to stay locally.
Domestic gas prices in WA are now about half as much as those on the east coast, with the state’s reservation policy credited as a key driver in putting downward pressure on wholesale prices.
A national gas reservation scheme could save average households up to $270 each year on their power bills, according to estimates by the Institute for Energy Economics and Financial Analysis.
The reservation scheme would go much further than the Australian Domestic Gas Security Mechanism (ADGSM) put in place by former PM Malcolm Turnbull in 2017.
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PM FRUSTRATED BY STATE GAS BANS
That trigger — which will now be reviewed — is a requirement around exports and imports and only takes in some companies. The government’s new scheme would require all companies with access to gas in the ground to keep enough supply available for Australian use.
The announcement sets up gas as the issue that will dominate talks between Prime Minister Scott Morrison and state leaders at Friday’s Council of Australian Governments (COAG) meeting in Cairns.
Victoria currently has a moratorium on conventional onshore gas exploration, and a permanent ban on unconventional forms such as fracking.
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