Chris Bowen lets Victoria off the hook on gas development call

Chris Bowen has refused to call on Victoria to encourage the development of gas, despite warning that supply from the Bass Strait was ‘depleting very rapidly’.

Energy Minister Chris Bowen. Picture: AAP

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Climate Change and Energy Minister Chris Bowen has refused to call on Victoria to encourage the development of gas, despite warning that supply from Bass Strait was “depleting very rapidly”.

After launching a significant review into the gas sector on Monday, Mr Bowen the following day declared Australia had no shortage as “we’re one of the world’s largest exporters”.

He also said he would not contemplate including gas peaking plants in the Capacity Investment Scheme, while reiterating his vow that vehicle emissions standards would not put up the price of petrol cars.

With business groups calling for the review to ensure there are regulatory changes to encourage more gas development, he said “We have no shortage of gas in total”.

“The policy settings need to be in place so that Australian consumers … have access to that gas or the gas-fired peakers,” Mr Bowen said.

The six-month review into the gas sector will consider the merits of an east coast reservation scheme, which is often pushed by climate activists who want a ban on new projects.

Mr Bowen has signalled the government would back new projects, as long as they supplied the domestic market.

Although he said a big problem with the outlook was the depletion of reserves in Bass Strait that provide supply to Victoria, Mr Bowen would not say whether the Allan government or NSW needed to do more to encourage development.

The Australian has reported Victoria was pushing for the commonwealth to underwrite LNG imports into the east coast to avoid shortages, which have been exacerbated by Dan Andrews’s four-year moratorium on gas development and a permanent ban on fracking.

“Every state has their own approach,” Mr Bowen said. “The demand and supply between gas in different states won’t always be perfectly matched … We need to manage that together.”

He identified new supply opportunities such as Narrabri in NSW, the Surat Basin in Queensland and the Northern Territory’s Beetaloo Basin. “Every day, we’re getting less and less gas out of the Bass Strait. We can’t pretend that’s not happening, and we need to look at ensuring the supply we have traditionally relied on from Bass Strait is replaced for domestic Australian users.”

An Australian Competition & Consumer Commission report released on Monday showed there was a growing reliance on Queensland to provide gas to east coast states.

“With declining reserves in the southern states, and the proportion of Queensland-produced gas projected to increase from 87 per cent in 2027 to 96 per cent of all gas produced on the east coast by 2037, the southern states are likely to increase their dependence on surplus gas from Queensland over the forward outlook,” the report says.

Queensland Treasurer David Janetzki said the review needed to consider “drivers of demand and supply on the east coast”.

“It is imperative an equitable playing field is in place for Queensland to support our industry,” he said.

Victoria’s opposition energy spokesman David Davis said the review was “a recognition of serious problems Australia-wide and the much more serious problems in Victoria”.

“Labor in Victoria has failed to ensure adequate gas supplies for the future, such is their hatred of and war on gas.

“It’s ideology gone mad rather than a serious practical focus on ensuring Victoria’s supplies of gas are secure.”

Grattan Institute energy program director Tony Wood said there was an issue with the amount of gas being supplied to Australia, compared to what was exported, but existing mechanisms were addressing the issue: “The evidence is the existing policies … have made sure we have not run out of gas.”

Additional reporting: Colin Packham