Domestic supply promised

Malcolm Turnbull signs the gas supply heads of agreement. Photo courtesy of Andrew Meares

Malcolm Turnbull signs the gas supply heads of agreement. Photo courtesy of Andrew Meares

The Prime Minister’s follow-up meeting yesterday with Queensland’s major LNG exporters to ensure domestic gas supply looks like it had a happy ending.

The Prime Minister, Deputy Prime Minister Barnaby Joyce, Energy Minister Josh Frydenberg and Treasurer Scott Morrison met with Origin, Santos and Shell last week in an attempt to reach common ground in addressing the shortfall predicted in the domestic market by the Australian Energy Market Operator (AEMO).

“The commitment today, which you’re making is to offer sufficient gas to meet the expected shortfall and any emerging shortfall through the good faith offering of gas to the domestic market on reasonable terms,” the Prime Minister told the gas companies.

“These commitments are vitally important to ensure Australian jobs and to ensure Australians have affordable and reliable energy and including electricity – gas being a more important fuel than ever in the generation of electricity.

“I want to thank you very much for those commitments and by ensuring that there will not be a shortfall of gas next year, that means we will not be required to place restrictions on exports.”

At the press conference was Shell Australia Chair Zoe Yujnovich, who spoke on behalf of the Queensland LNG exporters.

“There have been some difficult and tense moments and we appreciate the challenge that you’ve given to us,” said Ms Yujnovich.

“We hope that through the Heads of Agreement, indeed we can find a path forward to make sure that the domestic market is serviced and that indeed there is enough available gas for the market, which we stand behind and are committed to deliver.”

Australian Petroleum Production and Exploration Association (APPEA) Chief Executive Dr Malcolm Roberts said Queensland LNG producers would ensure eastern Australia would not run out of gas despite new forecasts of much higher than expected demand.

“Producers recognise that the east coast market, like other contract markets, lacks transparency,” said Dr Roberts.

“Providing the ACCC with detailed information in real-time about contract offers and agreements will bring unprecedented transparency into the wholesale market.

“We look forward to seeing similar transparency across the entire supply chain.”

Last week, the Australian Competition and Consumer Commission (ACCC) released its Gas Inquiry 2017-20 Interim Report that predicted significant shortfalls in the east coast gas market of up to 55 PJ in 2018, which could jump as high as 108 PJ if domestic demand is higher than expected.

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