Gas exports, via LNG, are making a major contribution to the economy with Australia on track to become the world’s largest LNG exporter by 2018.
However, the structural change that the expanding LNG export industry is causing is reverberating through the domestic gas market with significant price increases and many users reporting difficulties in accessing supplies.
It appears that the recent downturn in international prices is not being reflected in the Australian market.
Over many years, the Australian Pipeline Industry Association has brought the perspective of the gas transportation industry to the debate and discussion about the availability and accessibility of natural gas to users in the Australian domestic market.
As the representative of gas transportation, APIA has been described as having a unique insight into the whole national gas market.
Under our new name of the Australian Pipelines and Gas Association, we will continue to contribute to gas policy development, highlighting the value of natural gas to the economy.
A strong gas sector means a strong gas transmission sector – it also contributes to a strong national economy as well as energy security.
In the domestic market, natural gas provides a similar amount of energy for Australia as does the electricity sector.
Without the energy provided by natural gas, electricity generation from coal would need to increase dramatically.
Without natural gas, many manufacturing industries in Australia would close.
Structural shifts in the gas market prompt calls for policy change, which often leads to calls for more information.
Information is now available about national daily gas flows and short-term price-setting data available to the market through the Short Term Trading Markets (Sydney, Adelaide and Brisbane), the Gas Bulletin Board, the Wallumbilla Trading Hub and the Declared Wholesale Gas Market in Victoria.
No such detailed information is published regarding gas production and processing capabilities and publication of such information would help gas market participants make better-informed decisions in this time of structural change.
As well as information, the best solution to address supply difficulties is to increase gas supply to the market.
Measures that focus on restructure of the national gas markets will do little to ease these difficulties and APGA will continue to encourage Government policy that focuses on measures to help increase supply.
A number of policy opportunities could be considered:
- Increasing the number of participants in the supply sector. This would enhance competition and transparency. Smaller explorers could be encouraged to become gas producers and enter the national market, rather than simply provide their discovered gas to major producers.
- Facilitating access to processing facilities might also assist this market entry.
- Regulatory reform to encourage exploration tenements to move to the production phase. Gas reserves should only be developed when commercially viable but, after a certain period of time if not developed, exploration tenements could perhaps be relinquished. If one company can’t make the resource viable, another might be given the opportunity to innovate and bring the gas to market.
As APGA, we will also encourage better communication between the gas industry and the community to improve sustainable development of reserves, providing benefits to landholders and the broader community as well as gas companies.
With Australia’s abundant reserves of natural gas, it’s time we made stronger efforts to ensure increasing usage of this cleaner fuel within Australia.