The Australian Government plans to secure gas supplies for domestic use in an attempt to put downward pressure on prices and encourage new investment in gas supplies.
It will do this by bringing forward a review of the Australian Domestic Gas Security Mechanism (ADGSM) to this year instead of next year, due to major changes in global gas markets over the past six months.
The review will assess if the ADGSM is still fit for purpose to deliver a functional domestic gas market with the lowest possible prices for consumers, while ensuring strong investment in new gas production.
Specifically, it will investigate the “ongoing appropriateness” of the ADGSM’s total market security obligation arrangements. The review will be carried out by the department of industry, innovation and science and completed by the end of September.
The government will also consider options to establish a prospective national gas reservation scheme.
In a joint statement by Treasurer Josh Frydenberg and the Minister for Energy and Emissions Reduction Angus Taylor, it was indicated that past approval of large gas export projects “have not adequately considered the impact on the domestic gas market.”
The scheme is meant to coincide with a state and territory government focus on removing unwarranted restrictions on gas developments.
Finally, the federal government will increase transparency and supply in the gas market, including continuing reforms through the COAG Energy Council, which requires improved transparency from gas producers and LNG exporters on prices, reserves and resources and a comprehensive review of pipeline regulation.
Minister for Resources Matt Canavan said the measures would help create a stable domestic environment for the gas sector to grow, creating more jobs and wealth for Australians.
“Price and supply are inextricably linked. To put downward pressure on prices and shore up supply, we need more exploration and production,” Canavan said
“For too long we’ve seen some state and territory governments shelve onshore gas exploration for political purposes and the price we’ve paid is restricted supply and price creep. The plan outlined today tackles that and a host of other issues from all directions.”
Taylor said gas powered generation would be increasingly important in balancing the national electricity market as more intermittent renewable energy sources enter the market.
“The reliable, secure and efficient supply of both gas and electricity requires the delivery of enough gas, at an affordable price,” Taylor said.
“The measures announced today recognise we need a comprehensive plan across the gas supply chain which deals with production, prices and market transparency.”