Prime Minister Malcolm Turnbull has met with Australia’s gas producers on Wednesday, to address their ongoing row with industrial buyers over domestic gas supply and prices.
Queensland’s $80 billion LNG sector is telling the PM that claimed shortages in the market are being oversold by buyers, who are simply looking for the Government to help them secure a lower price, rather than signing contracts for gas which is already available.
But buyers are adamant the Turnbull Government needs to step in, and force the gas producers to designate a chunk of their gas for domestic buyers, at prices similar to those before the market was opened up to international competition, via the three major LNG export facilities commissioned at Gladstone over the past three years.
Meanwhile the PM is telling state and territory leaders that moratoriums and bans on gas exploration is worsening the situation, by putting a choke hold on local gas supply.
In letters to his state and territory counterparts earlier this week, Turnbull said moratoriums “are putting our energy security, industries and Australian jobs at risk,” and urged leaders “to immediately reconsider the policies you have in place”.
Turnbull received a pair of reports on Monday, from the Australian Energy Market Operator and the Australian Competition and Consumer Commission, which he said indicated the shortfall of gas in the east coast domestic market will be considerably higher than that estimated six months ago.
“At this point, it’s estimated there will be a shortfall of around 110 petajoules of gas, more than three times the figure that we were advised would be the shortfall earlier this year,” the Prime Minister said.
“The recent rises in the cost of gas are the single biggest factor in the current rise in electricity prices,” he added.
“Our commitment is to ensure that this shortfall, which we’ve been advised of today … does not happen. We will not let the power bills of Australians rise further and further because of a shortfall of gas on the east coast of Australia.”
Manufacturing Australia chairman James Fazzino agreed with the PM’s approach, saying on Sky News the “train wreck happening before our eyes” would require short-term and long-term solutions.
“The short-term solution is to intervene, but the long-term solution is more gas and more gas suppliers,” he said.