Business, lobby groups back gas review
Big business groups and the gas lobby back review that could lead to national reservation scheme.
Big business groups and Australia’s gas lobby have cautiously welcomed a Morrison government review which could open the door to a national gas reservation scheme.
Josh Frydenberg, Resources Minister Matt Canavan and Energy Minister Angus Taylor will announce today that the government is bringing forward a review of the Australian Domestic Gas Security Mechanism, will implement a “comprehensive review” of pipeline regulation, and extend the consumer watchdog’s role in monitoring and publishing gas market data until December 2025.
MORE: Gas reform closer with reservation scheme
Ai Group chief executive Innes Willox told The Australian today the review into reservation was “an acknowledgment of the dire situation” and that action was urgently needed to bring down electricity and gas prices.
“The Federal Government’s announcement of an inquiry into gas reservation is an acknowledgment of the dire situation facing industrial gas users in particular and the need for a variety of actions to address supply and cost issues,” he said.
“The gas price situation in Eastern Australia is serious and impacting industry competitiveness and electricity prices, and further action is necessary and urgent.
“Reservation is worth investigation given the success of WA and to some extent in Queensland. Such a policy would likely be prospective in nature and take years to deliver results. It would not replace the need for more immediate measures particularly given the vulnerability of gas intensive industry.”
Business Council of Australia chief executive Jennifer Westacott said today electricity prices had to come down, but warned the government against an overly interventionist approach to gas supplies.
“The link between more supply and lower prices is clear. We welcome the federal government’s call for the states and territories to lift their unscientific moratoriums on gas reserves,” she said.
“Opening up supply on the east coast, particularly in Victoria and NSW, is critical to driving down domestic gas prices.
“However, we need to strike a balance. An interventionist approach is risky in terms of our attractiveness as an investment destination, so we are pleased to see the government will undertake a considered and detailed review process.”
Gas company Santos — whose share price fell this morning off the back of the review’s announcement — welcomed the gas review as long as reservation of gas is prospective.
“Santos welcomes the new measures announced today by the Federal Government with a view to ensuring strong investment in new gas production as well as the lowest possible gas prices for consumers,” a Santos spokeswoman said.
“Santos has long supported a policy discussion about domestic gas reservation and has already committed to reserve all of the gas from the Narrabri Gas Project for the domestic market, if it is approved.
“Santos welcomes the government’s announcement that any national gas reservation scheme will be prospective, which will provide confidence to investors in our industry.
“As the government has recognised, the establishment of any such scheme should coincide with state and territory governments removing unwarranted restrictions on gas developments because opening up more supply sources is the best thing we can do to increase domestic gas supply and put downward pressure on gas prices.”
With Victoria and NSW holding back on opening major gas reserves, the Morrison government will consider setting up a national scheme to remove “unwarranted restrictions on gas developments” in the states and territories.
The gas reforms, which were discussed with the Centre Alliance in the lead-up to winning the minor party’s support for the Coalition’s income tax cuts package, come a week after Scott Morrison urged state governments to lift bans on gas exploration, saying he wanted to take “the pressure off” energy prices.
The Australian Petroleum Production and Exploration Association has been highly critical of Senator Patrick’s calls to reserve more gas for domestic use but APPA chief executive Andrew McConville cautiously welcomed the government’s moves today and promised to work with it.
“Sensible reforms can improve the efficiency of the gas market and its operation,” he said.
“But market interventions can adversely affect confidence in the oil and gas sector and discourage new market entrants and supply diversity. We will work closely with the government to ensure confidence is restored, not undermined.
Manufacturing Australia chief Ben Eade today urged state governments to work with the Morrison Government and help revive his sector through lower gas prices.
“By showing the courage to reform Australia’s gas market, the Morrison Government has an opportunity to power a resurgence in Australian manufacturing, get gas prices down for Australian households and make renewable energy more reliable,” he said.
“Manufacturing Australia urges State Governments in Eastern Australia to work with the Federal Government towards a model for East Coast gas reservation, and to support a stronger Australian Domestic Gas Security Mechanism as part of a bridge to new supply coming online.”
Labor’s energy spokesman Mark Butler said the Opposition backed domestic reservation of gas, but criticised the government’s timeline.
“We’ve said since 2015 that there should be action taken by the federal government to ensure that are secure and affordable supplies of gas,” he said in Adelaide.
“We’re derided at the time by Prime Minister Malcolm Turnbull as being economic vandals.
“If you read the fine print, there’s no real action till 2021 at the earliest. We need real action now.”