Domestic gas reserve officially on the table as government tries to force down prices


August 06, 2019 00:14:37

A portion of Australia’s gas supplies could be set aside for domestic use as part of a Federal Government push to try to bring down gas prices.

Key points:

  • The Government will look to replicate WA’s scheme in eastern Australia
  • The ACCC has backed calls for a national gas reservation policy
  • Resources Minister Matt Canavan says the Government is considering a range of policies

Resources Minister Matt Canavan announced the Commonwealth would formally examine a domestic gas reservation scheme in Western Australia, where he said consumers paid some of the most affordable gas prices in the world.

“Imitation’s the best form of flattery and what we’re seeking to do is imitate the best things about what is working in the west and possible apply it to eastern Australia,” he said.

“Our market is different over here, we’ve got multiple state governments, a pipeline network that straddles those jurisdictions, so we’ve got to work through a lot of issues.

“That’s why we’re going to have those discussions in a diligent, considered way in coming months and formulate whether or not we can Do something to reserve gas here in eastern Australia for our own use.”

Senator Canavan rejected suggestions the measure was part of a deal struck with Centre Alliance Senator Rex Patrick in exchange for his party’s support on the Government’s income tax cuts package last month, saying the government was already considering a range of policies.

He also announced the bringing forward of a scheduled review of the Australian Domestic Gas Security Mechanism, which could be used to force gas producers to limit their exports in the event of a domestic shortfall.

“Since we established gas export controls two and a half years ago, we have developed more measures of gas prices,” Senator Canavan said.

“Before that, there wasn’t a lot of useful, up-to-date information around what different people paid for gas in our region.

“So there has been a question mark about to what extent prices play a role in our decision-making under the gas export control framework and so given those developments we’ll look at how we might best integrate those.”

Gas reservation policy opposed by industry

While the Australian Competition and Consumer Commission (ACCC) has backed calls for a national domestic gas reservation policy, the industry remains opposed to the proposal.

The Australian Petroleum Production and Exploration Association (APPEA) previously said it would stifle investment and drive up prices, rather than lower them.

The government will take until February 2021 to consider its options and Senator Canavan said the states should also look at easing their own restrictions on gas developments.

“There’s not much point in reserving gas if you’re not actually producing any of it to begin with,” he said.

“So we will be making sure the states understand that if they support something like this, if they would like to see gas reserved for Australian use, well they’ve got to come on this pathway with us and develop their own resources too.”










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