Coalition unveil US gas alliance amid bid to spur Asian LNG demand

Australia has struck an energy alliance with the US to spur development of more LNG import infrastructure.

The Australia-US Strategic Partnership on Energy in the Indo-Pacific was quietly signed during Malcolm Turnbull’s recent visit to the US

Australia has struck a regional ­energy alliance with the US to spur development of more LNG import infrastructure in South Asia and Southeast Asia and boost demand for billions of dollars of Australian and US LNG exports.

The Australia-US Strategic Partnership on Energy in the Indo-Pacific was quietly signed during Malcolm Turnbull’s recent visit to the US with 40 Australian business leaders. But its economic goals were revealed by Federal Resources Minister Matt Canavan at a Sydney gas conference ­yesterday. Senator Canavan noted the US was a major competitor for new LNG sales in the big ­Japanese, Chinese and Korean markets of North Asia and the newer markets to the south.

“It’s not just about competition with the United States; there is also opportunity for us to co-operate, to expand the use of gas in ­particular in Asian markets,” the Resources Minister said yesterday at the Australian Domestic Gas Outlook conference.

“More energy infrastructure throughout Asia, especially in gas import receiving terminals, can help grow the wholesale gas ­market and create more opportunities for both of our countries.”

The Australia-US partnership’s goal is to promote energy ­infrastructure in developing ­nations in the Indo-Pacific, low-emissions technologies, and ­global gas markets, according to a White House release.

Senator Canavan plans to work on the deal with his US counterparts when he visits next week.

He did not detail how infrastructure investment would be promoted, saying at this stage it was a high-level agreement.

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The revelation comes after the minister stepped up his calls for NSW, the Northern Territory and Victoria to abandon onshore gas restrictions, saying they are relying on “voodoo science” that is damaging the economy.

Senator Canavan said that while domestic contract prices have come down since the Prime Minister intervened in the market a year ago, prices in southern states were still too high and he was still hearing reports from big industrial gas users that they were having trouble getting competitive supply offers.

“I am sick and tired of the ­voodoo science that state and ­territory governments seem to be wedded to,” the minister told the conference.

The mismatch between high producing Western Australian gas fields and tighter east coast supply has prompted two separate studies into establishing a natural gas import terminal on the east coast.

AGL Energy is studying the merits of building an LNG import terminal at Crib Point in Victoria, while billionaire Andrew Forrest is backing a proposal in NSW.

On global gas markets, the ­Resources Minister said there would be efforts to promote more transparent markets for the growing amount of LNG sold on spot and short-term markets. Short-term contracts are becoming more important as new markets are opened up using floating ­regasification import terminals, which allow smaller volumes into smaller markets than traditional, more expensive, fixed-import ­terminals that need big contracts to underpin them.

“There is a role for ­governments to co-ordinate and facilitate those (short-term ­supply) arrangements,” he said, stressing deal terms would be worked out commercially.

The US-Australia partnership, which covers Southeast Asia, South Asia and the Southwest ­Pacific, comes as China pursues its “One Belt, One Road” initiative to promote infrastructure development, trade and co-operation, and some say influence, in Eurasian countries. It is, of course, minuscule by comparison. A joint statement about the partnership on the White House website makes no mention of LNG infrastructure in particular.

The partnership has two core principles. These are that “open and competitive energy markets are indispensable to ensuring secure energy supply” and that “universal access to affordable and reliable energy from a variety of sources is needed to help eradicate poverty, fuel sustainable economic growth, and increase global security.”

The first of three core priorities under the partnership for this year and next is infrastructure development.

This will be infrastructure in developing Indo-Pacific countries that “promotes regional integration; adheres to principles of good governance, respect for the interests of all stakeholders, and transparency in bidding and financing; and expands access to the global energy market.”

The second is “deployment of low emissions technologies which support the secure, reliable, affordable and sustainable supply of energy in the Indo-Pacific.” It did not say whether “low emissions technologies” included gas or latest-technology coal.