PM secures gas deal to prevent shortfall

gas prices, ALP, pipeline, Blue Energy

The Prime Minister has announced he has secured more gas for Australians, following another meeting with three major gas companies.

Joined by Deputy Prime Minister Barnaby Joyce and Energy Minister Josh Frydenberg, the PM met with Origin, Shell and Santos yesterday to address recent reports from AEMO and the ACCC, that revealed the east coast is facing a significant gas shortfall next year.

The ACCC report, Gas Inquiry 2017-20 Interim Report, projected a supply shortfall of up to 110PJ in 2018.

Mr Turnbull said the companies had given a guaranteed to offer more gas to the domestic market to meet the shortfall.

“They’ve indicated or stated that they will provide a similar guarantee over two years – that’s their intention and will respond further in more detail on 2019 when we meet again next week,” he said.

“They’ve stated they will offer as a first priority domestic customers any uncontracted gas in the future as a priority.

“They have also given a commitment to provide regular reporting to the ACCC on sales, offers by them to sell gas and bids to buy gas from customers that they have declined.

“This is a very, very important step.”

Another meeting has been schedule for Tuesday.

“The aim is to reach agreement on a heads of agreement to ensure we have an effective gas market on the east coast, where customers can acquire gas on standard commercial terms from several vendors, several sellers, for a term of years at prices that reflect global prices,” the PM said.

“But we have secured that guarantee from these three big gas companies, three big gas exporters that the shortfall, the expected shortfall identified by AEMO and the ACCC in 2018, they will provide the gas to meet that.”

The Energy Minister said if NSW and Victoria wanted more affordable gas, they would have to start using their own resources.

“The commitments from the companies today do not let the states and the territories off the hook,” he said.

“NSW imports more than 95 per cent of its gas. Virtually all the gas that is produced in Victoria comes from offshore Commonwealth waters given the Andrews Government mindless moratoriums and bans on onshore conventional and unconventional gas extraction.”

Mr Frydenberg said if gas was to be developed in the southern states, there would be no additional transport costs.

“The ACCC makes it very clear in its report that $2 a gigajoule is worth 11 per cent to a household, residential gas bill in Victoria and about 5 per cent to a household gas bill in New South Wales because they use less gas in the households in New South Wales compared to Victoria,” he said.

“The ACCC have indicated that to ship or to pipeline gas from Wallumbilla in Queensland to Sydney is about $2 a gigajoule.

“To Victoria it is about $2.24 a gigajoule and it is just over $1.60 from Wallumbilla to South Australia.

“So, the clear preference is to get gas produced in the areas in which it is needed for the families and for the businesses in those states.”

The PM said the federal government had encouraged the NSW Government to “get a move on” with the Narrabri gas project, which could provide up to 50 per cent of the state’s supply.

The project has been protested by environmental activists, with the Lock the Gate Alliance vowing to fight “tooth and claw” against it.

‘No reason to fear shortfall’

APPEA chief executive Dr Malcolm Roberts said the agreement means there is no reason to fear that eastern Australia will run out of gas in 2018.

“The industry will ensure there will not be a shortfall of gas in the domestic market,” he said.

Dr Roberts said the industry applauded the Prime Minister’s leadership and commitment to finding a market-based solution that guaranteed gas supply to the domestic market without harming a vital export industry.

“More gas supply and more gas suppliers is the only sustainable way to meet long-term demand and put downward pressure on prices,” he said.

“It is essential that state and territory governments remove their political bans on developing local gas.

“New South Wales and Victoria, in particular, are heavy gas users but have blocked local projects.”