10 Jul 2023

Media Release: With Mandatory Code in place, Government must focus on new supply to avoid shortages

Australia’s oil and gas industry has called on the Federal Government to prioritise addressing forecast gas supply shortfalls to avoid black outs and further cost-of-living pain after taking control of the gas market with its new Mandatory Code of Conduct.

The Australian Petroleum Production & Exploration Association (APPEA) said the Code, released today, puts the Government at the centre of the gas market, determining the conditions for new supply through bilaterally negotiated agreements with gas producers.

APPEA Chief Executive Samantha McCulloch said the Government must now focus on ensuring new gas supply to address looming structural shortfalls.

The Australian Energy Market Operator (AEMO) and the Australian Competition & Consumer Commission (ACCC) have both warned of gas shortfall risks during peak winter periods from this year, and structurally from 2026-27, which carry with them severe risks to the economy.

The ACCC states that shortfalls “would place continued upward pressure on prices in the domestic gas market, as well as pressure on the electricity market”.

Ms McCulloch said the test for the Government’s Mandatory Code of Conduct would be if it can support investment that is urgently needed to bring on new gas supply.

“After more than 6 months of uncertainty as the Code was developed, investment in new gas supply is now urgently needed to avoid shortages that will add to energy security concerns and cost of living pressures for Australian households and business,” she said.

“The Government has taken the reins of the east coast gas market and with this comes the responsibility for ensuring sufficient supply and investment certainty.

“The industry has consistently demonstrated its commitment to the domestic gas market, including with 260 PJ of new indicative supply commitments made during the Code consultations.

“Gas producers will work constructively with the government and users within the new framework established by the Code and in the development of the Future Gas Strategy announced in the May Budget.”

“It is critical that the Future Gas Strategy delivers the long-term economic, energy security and emissions reduction opportunities associated with Australia’s natural gas resources while ensuring sufficient gas supply in the near- to medium-term.”

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