Page 11 - GLNG Week 04

GLNG AUSTRALASIA GLNG
Australia softens position over gas reserve scheme
POLICY
THE Australian government has softened its position on introducing a natural gas reserve policy following the release of a review into the Australian Domestic Gas Security Mechanism (ADGSM).
Australian Minister for Resources and North- ern Australia Matt Canavan released a statement on January 24 saying that Canberra would work with state and territory governments over the next year to “consider options to establish a pro- spective national gas reservation policy”.
The statement moves the government away from the definitive position set out by Canavan on December 5, when he said Canberra would simply work with governments to implement the policy.
The minister’s comments came as the govern- ment released its review of the ADGSM, which found that short-term gas offers had more than halved since the mechanism’s introduction. The ADGSM gives the federal government the power to limit LNG exports from projects that are run- ning at a deficit to the local market.
Canavan noted that short-term gas prices at the Wallumbilla Gas Supply Hub had fallen by around 46% from February 2017’s average of AUD12.49 per gigajoule ($325 per 1,000 cubic metres) to AUD6.71 per gigajoule ($174 per 1,000 cubic metres) in December 2019.
But despite improved wholesale gas prices, Canavan said some businesses were still find- ing it difficult to get longer-term gas offers and “some price offers remain higher than I want to see, especially when international LNG prices are low”.
He added: “That is why we will keep the ADGSM in place until its scheduled end in 2023, and the ACCC will continue to monitor the gas sector out until 2025.”
The statement said the review’s findings were supported by the competition watchdog, the Australian Competition and Consumer Com- mission (ACCC), and Australia’s energy market bodies including the Australian Energy Market Operator (AEMO) and the Australian Energy Regulator (AER).
Interestingly, while Canavan’s early Decem- ber comments have gained little industry trac- tion, his more obscure position has attracted a great deal of commentary.
The CEO of Queensland Resources Coun- cil, Ian Macfarlane, told The Australian: “We’ve got to make sure that enough gas is available for domestic customers and that gas needs to be at a reasonable price based on the LNG netback price. My understanding is that there is ample gas and it is being priced off the LNG netback price.”
He added: “I don’t think it (a domestic gas reservation policy) is necessary because there is ample gas, but that’s a discussion we will be having with the minister over the coming months.”
The head of Australian Industry Group, Innes Willox, said: “A reservation might give gas users greater security, or inadvertently undermine them. It may be a long time before a potential reservation has any effects, and it does not look possible to reverse the step change in production and transport costs.”™
The ADGSM gives the federal government the power to limit LNG exports from projects that are running at
a deficit to the local market.
My understanding
is that there is
ample gas and it
is being priced off
the LNG netback
price.
Ian Macfarlane
CEO Queensland Resources Council
Week 04 30•January•2020 w w w. N E W S B A S E . c o m
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