Media release: Gas reservation policy needs to be backed by new supply

Today’s release of the Gas Market Review recognises the need for fundamental reform of the east coast gas market to ensure Australian households and industry have access to reliable and affordable gas.

Australian Energy Producers Chief Executive Samantha McCulloch confirmed that gas producers support the introduction of a prospective domestic gas reservation scheme linked to new supply, but emphasised that the design and implementation needed careful consideration.

“As we said from the outset of this review, a well-designed, prospective reservation policy can provide certainty for gas producers and users to invest with confidence,” she said.

“However, a reservation policy alone will not fix the east coast gas market. Bringing new supply online sooner, including in the southern states that are facing shortfalls, is the only sustainable way to put downward pressure on prices and keep the market well supplied for the long-term.”

Ms McCulloch cautioned against proposed elements of the reservation policy, including requiring producers to sell rather than offer reserved gas to the market on reasonable terms.

“The risk of artificially oversupplying the market will impact new investment decisions and ultimately damage long-term supply prospects.

“The ACCC has confirmed that past market interventions have increased the risk of shortfalls by delaying and disincentivising investment. That’s why it is vital that we get these reforms right.”

Ms McCulloch reiterated calls for actions to fast-track new supply, including streamlining approvals and competitive policy settings for investment in new gas exploration and development. 

“Australia has more than enough undeveloped gas to meet our long-term energy needs while remaining a reliable energy partner in our region. Recent announcements by the Federal and Victorian Governments to open new areas for exploration are a positive step, but more needs to be done to secure the pipeline of new projects needed to meet future demand.

“As the Future Gas Strategy confirmed, natural gas will remain critical to Australia’s energy security to 2050 and beyond. That requires a strong, stable and competitive east coast gas market.

“Industry will continue to engage constructively on the design and implementation of the reforms to ensure they deliver on the Review’s objectives of a competitive, well-functioning gas market for the long-term,” Ms McCulloch said.