Gas reservation mooted as energy row heats up

Anthony Albanese confirms he’ll consider national gas reservation policy in longer-term bid to drive down energy prices.

Anthony Albanese has praised Western Australia’s ‘wise’ gas reservation policy. Picture: AAP

Anthony Albanese says his government will consider adopting a national gas reservation policy as a longer-term solution to drive down energy prices, as federal Labor faces increasing pressure over national cabinet’s planned market intervention.

Energy giants are demanding the government scrap the package to be put to federal parliament on Thursday and find an alternative solution, while the Greens are angling for more support to reduce electricity bills and households’ reliance on gas appliances.

Opening up a new front in the energy debate, the Prime Minister praised Western Australia’s “wise” gas reservation policy on Tuesday while spruiking national cabinet’s sweeping energy package, which includes $3bn in direct household support to welfare recipients, a $12-a-gigajoule cap on gas and $125-a-tonne cap on coal for 12 months, and a new code of conduct that could result in a requirement for gas to be permanently sold at a reasonable price.

Asked on ABC radio if “we” or the government also needed to look at a national gas reservation policy, Mr Albanese responded: “We do.”

Opposition energy spokesman Ted O’Brien dismissed Mr Albanese’s comments as a “shallow thought bubble” but the oil and gas industry lashed the idea.

Samantha McCulloch, Australian Petroleum Production and Exploration Association chief executive, told The Australian: “The nation already has the Australian Domestic Gas Security Mechanism and a Heads of Agreement in place as mechanisms to ensure supply. Adding additional layers of regulation will only impact investment and our global reputation among trading partners.”

NSW and Victoria have been pushing for a national gas reservation scheme and Queensland said on Tuesday it continued to do the heavy lifting on domestic gas supply, indicating other states could do more.

After Shell confirmed it had frozen a deal to offer gas to east coast customers in the wake of the energy package announcement, Woodside Energy called on the Albanese government to reverse its intervention into the market, saying the proposed changes could lead to energy shortages and gas rationing.

Shell, operator of the QCLNG gas export plant in Queensland, said a tender process offering 50 petajoules of gas to buyers in 2023 and 2024 had been paused by its QGC business as it assesses the fallout from Labor’s proposal to permanently control prices.

“Pausing the EOI process was not an option we wanted to take, however QGC needs to consider whether the design of the current EOI will meet the new regulatory requirements, including the 2023 price cap and the proposed mandatory code. An update will be provided in due course,” a Shell spokeswoman said.

Woodside Energy, which controls half the Bass Strait gas fields, asked for a meeting with the Albanese government to find alternatives to the proposal.

“Woodside calls on the federal government to reconsider this unprecedented intervention and bring energy companies, retailers, manufacturers and infrastructure owners together to properly engage on a solution,” chief executive Meg O’Neill said.

“No one wants to see energy shortages and gas rationing. We must develop a comprehensive, longer-term solution that addresses gas supply and reliability, the overall energy mix and infrastructure, without undermining the market-based economy.”

Energy Minister Chris Bowen is staring down attacks from gas companies, declaring their job was to maximise profits while the government’s job was to protect Australians. He pledged any compensation to coal companies that had a genuine production cost that was more than $125 a tonne would be “very, very rare”.

“We’ll continue to work in good faith across the parliament with the crossbench to ensure sensible outcomes,” he said.

Without Coalition support, the government will need to win over the Greens to pass the legislation through the Senate.

The Jacqui Lambie Network has already confirmed it will back the bill on the basis it will provide cost-of-living relief and Greens leader Adam Bandt did not rule out backing the package.

The Coalition partyroom will meet on Thursday morning before parliament is recalled but Mr O’Brien signalled a vote against the bill was likely.

“While we are yet to see the full detail of the bill, and the partyroom is yet to meet, I cannot see how price caps and permanent intervention by government does anything but jeopardise the economy and households and business,” Mr O’Brien told The Australian.

Even with the proposed price caps expected to soften soaring electricity prices by $230 for the average household, Mr O’Brien said Australians’ bills would increase substantially.

“Despite all the noise Labor is making about its new plan, it is telling Australian households that some people will pay an extra $700 next financial year (for electricity) and others will pay nearly $1000,” he said.

“The option we have proposed since day one is more gas supply in the system, because nothing will drive prices down more than higher supply.”