Gas sector calls on investment in new projects and end to ‘interventionist’ policies

Australia’s oil and gas industry has called on the Albanese government to invest in new projects while warning ‘interventionist’ policies will drive up prices.

Major gas producers are holding off finalising new supply contracts for next year until the government unveils its mandatory code of conduct. Picture: Thinkstock

Australia’s oil and gas industry has called on the Albanese government to invest in new projects and put pressure on the two most populous states to lift moratoriums, warning its “interventionist” policies will drive up prices.

In its budget submission to be released on Monday, the Australian Petroleum Production and Exploration Association also asks the government for a clear road map on how it plans to use carbon capture, utilisation and storage (CCUS) technology to achieve net zero by 2050.

And it wants the Environment Protection and Biodiversity Conservation Act reformed to remove regulatory duplication and stream­line approvals.

Major gas producers are holding off finalising new supply contracts for next year until the government unveils its mandatory code of conduct, which could result in a requirement for gas to be permanently sold at a reasonable price.

Consultations on the code are due to end on Tuesday, while price caps on coal and gas were also introduced in late December.

“This, along with ongoing legal hurdles and delays for new oil and gas projects, create significant uncertainty and make investors nervous to allocate new capital to the sector and the economy,” APPEA chief executive Samantha Mc­Culloch said.

“The government should take note of the lessons from the price cap implementation when considering permanent regulation of gas prices through a mandatory code of conduct. It would send a positive signal to investors to recommit to an open, market-based economy.”

Despite fierce resistance against new gas projects from the Greens, which share the balance of power in the Senate, APPEA said the government should support oil and gas development through acreage releases and by encouraging NSW and Victoria to lift moratoriums on new exploration and development.

The Coalition has also been pushing for investment in gas, insisting it will help ease rising prices for Australian households.

“Investment in new supply is central to unlocking secure and reliable energy, driving down prices and accelerating towards a net zero economy,” APPEA’s budget submission states.

“New supply requires long-term business commitments, so as Australia competes for scarce global capital, it is critical that policies and regulations – including fiscal settings – are attractive, and the investment environment provides stability and certainty.”

Noting gas was helping Australia transition away from coal, Ms McCulloch said capturing and permanently storing emissions from industrial facilities and the atmosphere through CCUS was critical to reaching net zero.

The peak body wants the government to identify and advance priority hubs for CCUS, low-carbon hydrogen and hard-to-abate industry. There were nearly 300 CCUS projects in operation or under ­development last year, compared to fewer than 100 in 2010. The number of projects ­operating during that time has remained at fewer than 50.

“Natural gas combined with CCUS is currently by far the most affordable pathway to low-carbon hydrogen production — meaning significantly more emissions reductions per dollar today, paving the way for alternative low-carbon hydrogen pathways as these technologies mature and costs come down,” the submission says.