Australian Energy Producers Chief Executive Samantha McCulloch
The Federal Government has missed an opportunity to address fundamental flaws in its proposed domestic gas reservation scheme, with legislation introduced today retaining key provisions that risk undermining investment, competition and Australia's long-term energy security.
Despite repeated warnings from industry, the legislation continues to pursue an artificial oversupply of the east coast gas market that will weaken investment signals and crowd out smaller, domestic-focused producers.
The proposed “must sell” requirement compounds these risks by potentially forcing producers to sell gas below cost or on non-commercial terms.
This is another short-term price intervention rather than a sustainable policy to encourage investment in new gas supply and deliver long-term certainty for gas producers and users.
Artificially oversupplying the market might deliver a short-term sugar hit, but it risks driving domestic-focused producers out of the market, reducing competition and ultimately putting upward pressure on prices and increasing the risk of future shortfalls.
The Government’s own analysis finds the policy could reduce gas production and investment relative to the status quo, while increasing the regulatory burden on industry by $75 million
The Government cannot expect industry to invest billions of dollars in new gas supply while introducing policies that fundamentally undermine the commercial viability of those investments.
Australian Energy Producers supports a well-designed, prospective reservation policy linked to new supply that provides long-term certainty for gas users and producers.
With the legislation now before Parliament, there is still time for the Government to work with the Coalition to address these critical flaws and deliver a sustainable framework that ensures Australian households and businesses have access to reliable and affordable gas over the long term.