The Federal Government has opened a review into gas market regulations, carefully examining how the country’s gas policies work for the economy as part of the energy transition.
In particular, the government will consult with industry, stakeholders and the public on the following instruments:
- The Australian Domestic Gas Security Mechanism (ADGSM)
- The Gas Market Code
- The Heads of Agreement with major east coast gas exporters
Over the next six months, the government will examine whether these instruments can be improved and strengthened to ensure sufficient affordable gas supply in the longer term.
The review comes at a time when key market bodies are predicting gas shortfalls in the coming years.
A large majority of Australia’s natural gas is exported to international markets as LNG every year, usually via multi-decade contracts. With declining domestic supply, implementing a domestic gas reservation scheme for the east coast, similar to policy already in place in WA, is an idea that has gained some traction.
But the Federal Government is approaching this option with caution, with Minister for Climate Change and Energy Chris Bowen making it clear that exporters will not be made to walk back on existing contracts. At the same time, reservation rules for new projects may be on the cards.
“One thing we won’t contemplate is ripping up existing [export] contracts, creating sovereign risk, engaging in behaviours which would see Australia as an unreliable supplier,” he said.
“What we will be looking at is sensible, forward-looking prospective measures to ensure that Australians get access to their gas.
“It’s important that if there is new [gas] supply that Australians have the chance to get access to it. New supply wholly for export will not help Australia’s domestic gas needs.”
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