Gas producers attack export controls as industrial users cheer ‘bold’ changes
Malcolm Turnbull forced to clarify that though wholesale costs may halve under plan, prices paid by households will not. Gas producers have labelled the government’s imposition of export controls an “almost unprecedented” sovereign risk that threatens investment in gas production that would increase supply. But Australian industrial gas users, represented by the Australian Industry Group, have cheered the “bold” changes to secure domestic supply. Malcolm Turnbull initially said gas prices should halve as a result of new export restrictions announced on Thursday but was forced to clarify that wholesale prices may halve but retail prices paid by households would not. Under the plan the government would gain a power to impose a limit on exports, acting on advice from the Australian Energy Market Operator and the competition regulator that a shortage existed. The Australian Petroleum Production and Exploration Association chief executive, Malcolm Roberts, said that the move was “almost unprecedented for Australia”. “At a time when we need billions in new investment to create more gas supply, any intervention which creates sovereign risk is alarming.” He said the industry would consider the details of the announcement in the “very short consultation period” before they come into effect on 1 July. Roberts accepted that the east coast gas market was “tight” but blamed regulations imposed by the New South Wales, Northern Territory and Victorian governments preventing development of gas projects. “The only solution is more gas, not more regulation.” The Australian Industry Group chief executive, Innes Willox, said the introduction of export controls was “an appropriate and welcome response to an extraordinary crisis”. Willox said the policy gave the gas industry flexibility “to make commercial agreements to fill the hole in domestic supply due to the over-commitment to exports”. “We are hopeful that the government’s intervention will see the gas supply and price crisis ease in the near future – and that these steps will also take pressure off electricity prices.” AiGroup has called for the government to facilitate swaps to allow more gas to be used by domestic industry and has long advocated a national interest test for exports. AiGroup has called for the government to facilitate swaps to allow more gas to be used by domestic industry and has long advocated a national interest test for exports. In an interview with ABC Brisbane, Malcolm Turnbull said lifting bans on exploration and production would provide a long-term solution but the export controls would help protect Australian jobs in the short term. The prime minister said the policy would ensure that the price of gas in Australia was comparable to levels in the international market. “It will be cheaper than the prices that are being offered now. People are being offered prices of $20 a gigajoule. It should be around half that or less.” At a press conference on Thursday Bill Shorten seized on the comments, claiming Turnbull had said that “under him gas prices will halve, for industry, for householders”. “Mr Turnbull needs to explain exactly when gas prices will halve.”
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on Apr 27 2017. Filed under News at Now.
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