Oz Producers Slam LNG Export Curb Idea
The Australian Petroleum Production & Exploration Association (Appea) has slammed the federal Labor Party’s "counter-productive" proposal for permanent controls on Australia’s gas exports.
"More regulation and political uncertainty risks deterring investment in new gas supply which, over time, will mean higher prices," said Appea CEO Malcolm Roberts September 3, in response to the announcement: “Appea believes it is vital that any future policy changes support continuing investment in new supply. Without that new supply, the market will tighten and prices will rise. Trying to regulate prices does not tackle the real problems – the rising cost of producing gas and tightening local supply in Victoria and New South Wales, he said. Instead, there should be more local supply to avoid customers paying significant shipping costs."
He said Appea members were committed to supplying local customers at competitive prices and that east coast LNG projects are offering all their uncontracted gas to domestic buyers first: “The Australian Competition and Consumer Commission (ACCC) reports that the three LNG projects in Queensland have contracted to sell 305 petajoules (PJ) of natural gas [8.15bn m3] to domestic customers in 2018 – about half of east coast demand – and are likely to do the same in 2019. Companies operating from offshore Victoria, South Australia and other Queensland gas projects supply the rest of demand.
“ACCC monitoring of the market shows that prices have fallen sharply over the last twelve months. Restricting exports and killing jobs in Queensland does not lower gas prices in Sydney and Melbourne. Unless new gas resources in New South Wales and Victoria are developed, families and businesses in those states will pay more than those in states continuing to develop new supply. As the ACCC has pointed out; shipping gas from Queensland to southern customers adds [A]$2‑$4 in transport costs.
“The ACCC has also found placing downward pressure on prices in the southern states requires more supply to be developed in those southern states.”
Appea also said the decision to make the export controls permanent should be informed by the findings of the scheduled review in 2020: "Making export controls permanent will compound the already significant level of sovereign risk created by the Australian Domestic Gas Security Mechanism, affecting more than [A]$250bn [US$180bn] invested in Australia by both domestic and foreign investors. It sends an alarming signal to investors considering future investment in Australia.”