This report, prepared for DomGas Alliance, mentioned that gas-rich countries like the United States, Canada, Russia, Norway and the Netherlands relied on policies to protect the national interest and maximise value from gas resources. Simply relying on market forces as Australia does is not international practice, said the report.
DomGas Alliance Executive Director Gavin Goh said the report explodes many of the myths in the domestic gas debate.
“LNG represents less than 10 per cent of world gas production and only 30 per cent of international gas trade.
“Australia has abundant gas resources so there is no reason why prices in energy-poor Japan should dictate prices in Australia.Article continues below…
“Neither the US nor Canada consider it smart policy to link domestic energy prices to the world’s highest prices in Japan.”
The report found affordable gas is a major competitive advantage for countries – as an energy source for industry, the cleanest fossil fuel and as a feedstock for value-adding industries.
However, the report warned that the convergence of domestic gas prices to export parity or LNG netback first in Western Australia, and now in the east coast, will have serious consequences for Australia.
According to the report, higher gas prices will impact industries like fertiliser, chemicals, glass, paper and steel, as well as the farms and businesses that use those products. The report also states that companies in Australia will be forced to close and relocate facilities to other countries where gas costs are lower and a switch from carbon-intensive coal to clean natural gas will not occur, even with a carbon tax.
“The report points out that while it might take a decade to build an LNG project, it takes many decades to build a manufacturing sector,” Mr Goh said.
“The experience in WA and overseas is clear. Government must protect the national interest and prioritise Australian industry and households.”