The Australian Competition and Consumer Commission's (ACCC) latest Gas Inquiry Interim Report has reinforced the importance of policy settings that support ongoing investment in new gas supply, as the Federal Government considers its proposed domestic gas reservation scheme.
The report confirms that while the east coast gas market is expected to remain well supplied in the near term, continued investment by both LNG exporters and domestic producers will be required to meet Australia's future gas needs.
The ACCC’s assessment reinforces industry’s concerns that requiring LNG exporters to divert 20 per cent of export volumes into an already well-supplied domestic market risks creating a structural oversupply that would undermine investment and reduce competition.
The ACCC also states that, "In the context of the Government's proposed gas reservation scheme, policy settings should support the most efficient sources of supply and infrastructure investment" and recommends “reducing barriers for new entrants and producers seeking to develop prospective resources” to diversify and grow supply.
Australian Energy Producers Chief Executive Samantha McCulloch said the Government's proposed reservation framework, as currently designed, would create significant uncertainty for investors and discourage new gas developments.
"The ACCC report reinforces Australian gas producers’ calls for a gas reservation framework that supports investment in our abundant gas resources to ensure Australian households and industry continue to have access to reliable and affordable energy," Ms McCulloch said.
“Requiring LNG exporters to supply 20 per cent of their export volumes into an already well-supplied market risks crowding out domestic-focused producers, which will lead to shortfalls and higher prices.
“Australian gas producers support a well-designed, prospective domestic gas reservation scheme linked to new supply and calibrated to market needs. With domestic gas prices at their lowest in years and the market well-supplied, there is still time to get this right.”
