Australia’s big LNG exporters – including Shell and Exxon - have agreed to a request from Prime Minister Malcolm Turnbull to supply more gas to the domestic market.
But despite the deal, Mr Turnbull did not rule out pursuing a gas reservation policy in future and reminded the industry of the federal government’s “ability to control exports”. Australia is expected to be the biggest exporter of LNG in the world by 2021.
The move comes after a report from the Australian Energy Market Operator warned of possible blackouts from next year in New South Wales, Victoria and South Australia due to a gas shortfall (see last week’s GtP).
The agreement will mean more of the gas earmarked for export will be sold to the domestic market at a cheaper price.
“We are focused on ensuring that all Australians have access to secure energy, secure and affordable gas. It is utterly untenable, unacceptable, for us to be in a position where domestic gas consumers, whether it's generators, whether it's businesses and industry, or whether it's families, cannot have access to affordable gas,” said Turnbull.
Companies represented at the talks included Santos, Shell, ExxonMobil, Origin, Total, Asia Pacific LNG, Beach Energy, GLNG Operations and Senex, as well as the Australian Petroleum Production and Exploration Association.
Domestic reform
The government also said it would set up a gas industry commission under the umbrella of the Australian Competition Consumer Commission (ACCC). Alongside this, gas market reforms are being accelerated and the government is putting pressure on the state of Victoria to reverse its fracking ban and allow development of onshore gas reserves.
“We have agreed that we must continue the pressure on state governments to revisit the restrictions of gas development and exploration, so there won't be a repeat of a situation where a gas-peaking power plant is called on by the regulator to produce electricity during a heatwave, and there's no gas available,” Mr Turnbull said.
Last week South Australian Premier Jay Weatherill unveiled a $500 million energy plan, which included building a new state-owned gas-fired power plant and Australia’s largest battery, amid mounting pressure over recent power blackouts in the state as it moves to a lower carbon system.