Oz Plans Gas Reservation to Boost Local Supplies
The Australian government August 6 said it would consider options to establish a prospective national gas reservation scheme to boost supplies in the domestic market.
This was part of a joint media release by treasurer Josh Frydenberg, minister for energy and emissions reduction, Angus Taylor and resources minister Matthew Canavan.
“Past approvals of large gas export projects have not adequately considered the impact on the domestic gas market and that has contributed to some of the pressures we have seen in recent years. We cannot afford to repeat these past mistakes,” the statement read.
While considering the establishment of a gas reservation scheme, the government will co-operate with the states and territories.
“The establishment of any such a scheme should coincide with state and territory governments removing unwarranted restrictions on gas developments. The government will seek to conclude its consideration of options by February 2021,” the statement continued.
Should the agreement not be reached with the states, the government will look to develop its own policies to ensure future gas export proposals provide sufficient gas into the domestic market.
Australia’s LNG exports from Queensland projects have surged in past few years as prices in the East Australian market have gone up. The government has been under significant pressure from the manufacturing sector to rein in prices and boost supplies. Two years ago it introduced the Australian Domestic Gas Security Mechanism. Under this mechanism, the government every year assesses whether LNG exports from Queensland need to be restricted. Till now the government has not restricted exports.
Meanwhile, the Australian Petroleum Production Exploration Association (Appea) in a separate statement said increased gas supply remained the most pragmatic response to ensuring competitive prices are available to Australian homes and businesses.
“Sensible reforms can improve the efficiency of the gas market and its operation. But market interventions can adversely affect confidence in the oil and gas sector and discourage new market entrants and supply diversity. We will work closely with the government to ensure confidence is restored, not undermined,” Appea CEO Andrew McConville said.
“The best way to put downward pressure on gas prices remains more gas supply. Eastern Australian gas users have paid a high price for unnecessary, unscientific restrictions on gas development in Victoria, New South Wales and, until recently, the Northern Territory,” McConville said.