Victoria faces 50 per cent gas supply fall by 2021 despite claims

Daniel Andrews says there’s no gas supply problem but the energy market regulator begs to differ.

Victorian Premier Daniel Andrews.

Victoria’s available gas supplies will almost halve in the next four years as the Turnbull government yesterday hit back at Premier Daniel Andrews’ claims that his state does not have a gas supply problem.

The Labor Premier yesterday defended his government’s moratorium on onshore gas development on the ABC’s Insiders program, saying the state had not used the full extent of gas available to it in the past year.

The Andrews government has banned fracking — a position supported by the state Liberal opposition — and extended a moratorium on the exploration and extraction of onshore gas by conventional methods until 2020.

“Last year, 402 petajoules of gas — that’s what was produced in Victoria. How much did we use? 206 petajoules. Put another way, enough supply for seven million houses. We used 3½ million houses worth,” Mr Andrews said.

But the Victorian gas planning report published by the Australian Energy Market Operator in March said the amount of available gas would plummet from 420PJ this year to 242PJ in 2021 — an almost 50 per cent drop in supply.

This includes a decline in production from the Gippsland Basin from 345 to 228PJ by 2021 and a drop in production in the Otway Basin from 76 to 14PJ.

AEMO also stated that, of this total production, just 107PJ would count as available supply in 2021 despite a projected consumption of 198PJ for the year.

Federal Energy Minister Josh Frydenberg told The Australian Mr Andrews’ support for a $250 million terminal to bring in gas from overseas was proof the Premier was aware there was a supply problem in the southeastern state.

“Why has Labor enthusiastically embraced this expensive option when the quickest way to lower power prices and create more jobs is to develop their 40 years’ worth of domestic supply,” said Mr Frydenberg.

Mr Andrews told the ABC yesterday that the import terminal was energy company AGL’s project, not one by his government.

However, he spoke as recently as August in support of the AGL Crib Point project, and in June Mr Andrews’ Energy Minister Lily D’Ambrosio also said the state government was exploring an import terminal.

Mr Andrews’ statement that there are no “proven or probable onshore reserves” has been challenged, with a February report from Geoscience Australia saying Victoria has almost 27 trillion cubic feet’s worth of unconventional onshore gas.

Liberal MP for the semi-rural seat of Corangamite, Sarah Henderson, said Mr Andrews’ “extreme left” policies were driving up power prices, and argued the Turnbull government was not pushing to lift the fracking ban.

“While the ban on fracking and unconventional gas must remain, conventional gas should be unlocked subject to strict environmental controls and landowners being given an absolute right of veto,” she told The Australian.

The Andrews government still has the backing of the state’s farmers over gas after Victorian Farmers Federation president David Jochinke said he supported both the fracking ban and conventional gas moratorium.

Mr Jochinke said he had not seen evidence that proved there were onshore reserves.