Turnbull wins commitment from gas exporters to ensure local supply

VICTORIAN households are guaranteed access to gas this winter after Malcolm Turnbull gained commitments from two of the nation’s biggest gas exporters.

• Reserve supply could avert gas crisis
• Energy-supply threat sparks intervention

VICTORIAN households are guaranteed access to gas this winter after Malcolm Turnbull gained commitments from two of the nation’s biggest gas exporters to put more supply into the domestic market.

The Prime Minister made it clear to the gas industry on Wednesday he would impose drastic regulations — including forcing exporters to sell their gas to local customers in a domestic reservation policy — if companies did not keep their promise.

Gas companies have been also urged to step up production, after a report by the energy market regulator predicted gas shortages could lead to imminent widespread power shortages.

Thousands of Victorian manufacturing jobs could also be placed at risk because of the rising costs of suppling factories and food processors.

Minister for the Environment and Energy Josh Frydenberg, with PM Malcolm Turnbull, 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. Picture Kym Smith

Faced with an energy crisis across eastern Australia, Mr Turnbull again took a swipe at the

culpability of state governments — in particular Victorian Premier Daniel Andrews — for banning gas exploration while Hazelwood prepares for closure.

“The recklessness of that policy, that is what is undermining the gas market,” Mr Turnbull said. “I stress, we will not shirk from any measures that would be required, if all else fails, to protect Australian businesses, jobs and families.”

The government will hold another meeting with the industry in a month to set rules for how big gas producers along the east coast should make supplies available to ease shortages in the domestic market.

A tougher competition regulator is also being planned to increase the transparency around the price being paid and the contracts being signed, which in some cases have seen gas intended for the domestic market resold for export at higher prices.

Shell Australia chairman Andrew Smith said the industry understood community acceptance of a gas export industry depended on a reliable supply of gas to Australian workplaces and homes.

“We understand that if we want a long term export industry we need to make sure Australians have gas available at competitive prices,” he said.

But he said competitive price for gas would only happen if additional local supply was tapped into — particularly in Victoria.

“If not every Victorian household and business will pay more for gas than they need to. In the state that depends most on gas, this means less jobs, less investment and a higher cost of living,” Mr Smiths said.

Mr Andrews said Mr Turnbull needed to admit that the national energy market was failing households and businesses across the country.”

“If he can bring himself to acknowledge that, we can then have a mature discussion about our energy future,” he said.

Australian Industry Group chief Innes Willox said the country was now paying the highest gas prices in the developed world.

“The soaring price of Australian gas has now reached record levels, taking Australia from having a competitive advantage in low gas prices, to the point where even Japanese customers are able to buy gas on spot markets for well below the prices being offered to Australian customers today,” he said.