Matt Canavan says gas prices have been cut in half

Matt Canavan said domestic gas prices were now broadly in line with those being paid in Asia for Australian gas.

The Turnbull government says it has met its objective of halving domestic gas prices, while ­reassuring overseas gas buyers of the reliability of Australian LNG exports.

Resources Minister Matt Canavan said the threat of export controls had brought gas prices to $8-$9 a gigajoule — down from up to $20/GJ in April when Malcolm Turnbull declared prices should be “around half that”.

“Our goal in introducing the gas security mechanism was to bring prices down to a reasonable level, a fair level, a level that reflected the world price. And that has happened — there is no doubt about that,” Senator Canavan said. He recently returned from Japan and South Korea, where he sought to ease fears about the new Australian Domestic Gas Security Mechanism.

The government decided in November not to trigger the mechanism, relying instead on a “handshake” deal with industry to set aside sufficient gas to meet domestic shortfalls.

Senator Canavan said the government reserved its rights to trigger export controls next year if lower prices did not hold. He said he believed Asian gas buyers understood Australia had to secure its own domestic supplies.

“They welcome that we haven’t had to trigger the gas ­export controls, but understand we still have the framework in place and we will be doing what we need to do to secure our energy security,” Senator Canavan said.

He said domestic gas prices were now broadly in line with those being paid in Asia for Australian gas.

Senator Canavan said transport costs meant gas in the southern states was still higher than in Queensland, and warned that moratoriums on new gas projects in the southern states would continue to hurt consumers.

Leading gas producer Santos said it was delivering on a commitment with its LNG partners to provide more than 60 petajoules of gas into the domestic market over the next two years.

“That said, as existing sources mature and decline, it’s absolutely critical that access to new gas supply sources is opened up within the next few years, particularly in NSW and the NT,” Santos chief executive Kevin Gallagher said.

The competition watchdog said in July that prices offered to large commercial and industrial customers had come down from a peak of $16/GJ in early 2017 to within an $8-12/GJ range.

Australian Competition and Consumer Commission chairman Rod Sims said the gas shortfall in the southern states added $2-$4/GJ to the prices paid by consumers in those states.

Labor energy spokesman Mark Butler said he’d received reports that some companies were still being offered gas contracts as high as $14/GJ.

He said the government’s current deal with gas suppliers was unenforceable, as the Department of Industry warned in June.

“If the government was serious about ensuring affordable domestic supply of gas, they would have used export controls to put some teeth into their agreement with gas companies,” Mr Butler said.

An Origin Energy spokeswoman said gas producers and suppliers had worked with government to make more gas available to domestic customers, which had helped to bring prices down significantly. However, she said restrictions on new gas projects remained a problem.