Prime Minister promises gas-powered recovery
PM Morrison claims gas will help re‑establish a strong economy, making energy affordable for families and businesses and supporting jobs as part of Australia’s recovery from the COVID-19 recession.
Prime Minister Scott Morrison announced today that the Government would reset the east coast gas market and create a more competitive and transparent Australian Gas Hub by unlocking gas supply, delivering an efficient pipeline and transportation market, and empowering gas customers.
The Government will get more gas into the market by:
- Setting new gas supply targets with states and territories and enforce potential “use-it or lose-it” requirements on gas licenses
- Unlocking five key gas basins starting with the Beetaloo Basin in the NT and the North Bowen and Galilee Basin in Queensland, at a cost of $28.3 million for the plans
- Avoiding any supply shortfall in the gas market with new agreements with the three east coast LNG exporters that will also strengthen price commitments
- Supporting CSIRO’s Gas Industry Social and Environmental Research Alliance with $13.7 million.
- Exploring options for a prospective gas reservation scheme to ensure Australian gas users get the energy they need at a reasonable price
The government has also committed to boost the gas transport network by:
- Identifying priority pipelines and critical infrastructure as part of an inaugural National Gas Infrastructure Plan (NGIP) worth $10.9 million that will also highlight where the government will step in if the private sector doesn’t invest
- Reforming the regulations on pipeline infrastructure to promote competition and transparency
- Improving pipeline access and competition by kick-starting work on a dynamic secondary pipeline capacity market
To better empower gas consumers, the Government will:
- Establish an Australian Gas Hub at our most strategically located and connected gas trading hub at Wallumbilla in Queensland to deliver an open, transparent and liquid gas trading system
- Level the negotiating playing field for gas producers and consumers through a voluntary industry-led code of conduct, to be delivered by February 2021.
- Ensure Australians are paying the right price for their gas by working with the ACCC to review the calculation of the LNG netback price which provides a guide on the export parity prices
- Use the NGIP to develop customer hubs or a book-build program that will give gas customers a more transparent and competitive process for meeting their needs
“To help fire our economic recovery, the next plank in our JobMaker plan is to deliver more Australian gas where it is needed at an internationally competitive price,” the Prime Minister said.
Gas supports the manufacturing sector, which employs over 850,000 Australians and is an essential input in the production of plastics for PPE and fertiliser for food production. In 2019, Australia was the largest exporter of LNG, with an export value of $49 billion.
Low gas prices also drive down electricity prices, benefiting all Australian households and businesses. Gas complements our world leading renewables sector by keeping the lights on when the sun isn’t shining and the wind isn’t blowing.
The Government wants the private sector to step-up and make timely investments in the gas market. If the private sector fails to act, the Government will step in – as it has done for electricity transmission – to back these nation building projects. This may include through streamlining approvals, underwriting projects or the establishment of a special purpose vehicle with a capped Government contribution.
The Government has already taken a number of important steps to ensure affordable and reliable gas prices for Australian users, including increasing domestic supply through the Australian Domestic Gas Security Mechanism, supporting the development of the Beetaloo Basin, and successive Heads of Agreement with east coast LNG exporters.
Gas is part of the Government’s plan to reduce emissions without imposing new costs on households, while at the same time creating jobs, growing businesses and the economy.
The Prime Minister said the Government would also work with state governments through a program worth up to $250 million to accelerate three critical projects – the Marinus Link, Project Energy Connect and VNI West interconnectors.
“These links will help put downward pressure on prices, shore up the reliability of our energy grid and create over 4,000 jobs,” the Prime Minister said.
“Our plan for Australia’s energy future is squarely focused on bringing down prices, keeping the lights on and reducing our emissions and these interconnectors bring us a step closer to that reality.”
The Government's plan aims to hold the energy companies to account and maintain downward pressure on electricity prices while simultaneously developing the backbone of a reliable, lower emissions National Electricity Market for the next decade and beyond.