Billionaires’ Qld gas deal hinges on controversial price cap, approvals

A $1 billion gas field expansion will power a major Queensland manufacturer but it hangs on environmental approvals and the Albanese Government’s controversial gas price cap.

A $1 billion gas field expansion will power a major Queensland manufacturer, in a gas supply deal hailed as securing “long-term local manufacturing” jobs, but it hangs on environmental approvals and the Albanese Government’s controversial gas price cap.

It is part of a deal inked between companies linked to two of Australia’s wealthiest and most influential billionaires, Gina Rinehart’s Senex and Anthony Pratt’s Visy.

Under the deal, Senex’s Atlas gas field expansion in the Surat Basin will supply Visy’s packaging and recycling manufacturing operations in Queensland for 10 years from January 2026.

Senex has signed a deal to supply Visy gas from its Atlas gas field expansion in the Surat Basin. Picture: Senex Energy Limited

But, Senex paused its Atlas expansion in December 2022 in the wake of the government’s then temporary gas price cap – which has now been extended until 2025.

It is understood the expansion remains on hold while the company considers the details of the Federal Government mandatory code of conduct, which was released earlier this month.

It is also dependent on its final approvals under the Environmental Protection and Biodiversity Conservation Act.

Senex CEO Ian Davies said manufacturers were facing difficulties securing gas, but the Atlas would bring new supply to the market and put downward pressure on prices.

“Having gas for the manufacturing industry is absolutely paramount, and the only way that’s going to stay reliable is for there to be more investment, not less” Mr Davies said.

“More secure and reliable gas supply will help to keep Australian manufacturers in business and tens-of thousands of people in secure, well-paying jobs.”

Senex CEO Ian Davies. Picture: Supplied, Senex Energy Ltd

Visy CEO Mark de Wit said the agreement would underpin the company’s investments in the state.

“Visy is proud to be investing $700 million in Queensland and this agreement means we can continue to grow our manufacturing operations,” he said.

Visy is spending about $700 million to upgrade its recycling facility on Gibson Island, which is expected to remove 39,000 tonnes per year of paper and cardboard from landfill.

The value of the deal remains commercial-in-confidence.

Under the mandatory gas code of conduct, the domestic gas prices cap of $12/GJ was extended until at least July 2025, at which point it will be reviewed.

The current end point for the cap is six months before the contract is due to start.

The cap applies to domestically sold gas, not exports, but the government made a concession to industry by allowing gas companies to negotiate exemptions if they commit to increasing domestic supply.

Energy Minister Chris Bowen has said capping coal and gas prices has “shielded Australians” from higher power bills and that the code struck the right balance between cost of supply.

Originally published as Billionaires’ Qld gas deal hinges on controversial price cap, approvals