Matt Canavan opens door to supporting domestic gas reserve

Resources Minister opens door to supporting a domestic gas reserve, a key issue for the Centre Alliance.

Matt Canavan has opened the door to supporting a domestic gas reserve. Picture: Claudia Baxter.

Resources Minister Matthew Canavan has opened the door to supporting a domestic gas reserve, a key issue for the Centre Alliance as the minor party considers whether to back the government’s full tax agenda.

Finance Minister Mathias Cormann has repeatedly said he will not make special deals with crossbenchers to pass the tax relief bill, despite reports this morning the government is considering backing Centre Alliance senator Rex Patrick’s calls for a domestic gas reserve and a triggering of the Australian Domestic Gas Security Mechanism.

The Resources Minister today said that a domestic gas reserve - which is opposed by the gas industry - is an issue that will come up as Australia develops its gas resources.

“We stand ready to take whatever action is necessary, of course, to deliver competitive prices to Australian consumers,” he told Sky News

“That question (of a domestic gas reserve) is one that’s going to come up in the years to come.

“We don’t want to see what happened years ago. Back in 2012,the six LNG trains in Gladstone were approved without consideration of the impact on domestic gas fields.

“We’ve got to look forward now and think about about, when we next perhaps develop large gas resources in Australia, what framework we have in place to ensure that Australians benefit from such a development directly.”

While Senator Canavan confirmed he had long discussions this week with Senator Patrick on gas prices, the Resources Minister said he had not connected the issue with tax cuts as it was not his portfolio.

Senator Patrick told The Australian last week that the Australian Domestic Gas Security Mechanism should be triggered if after six to 12 months average domestic prices exceeded those in Asian markets.

“The general principle is you look at the average prices over a period and where our average price exceeds the average price of the Asian gas market, to whom we export, and for countries to whom we compete with, then the mechanism should be triggered,” he said. “What happens when the trigger is pulled is it stops all exports and the minister then grants licences for companies to export. And when they do so they need to make sure there is a sufficient surplus in our market to … guarantee supply and … ensure the price is reasonable.”

Under the ADGSM, which has been in place for two years but never triggered, gas companies could be required to limit exports or find new sources of gas if there is a supply shortfall in the domestic market.