Prime Minister Scott Morrison has announced a two-year deal with Gladstone-based LNG exporters to help reduce domestic energy prices.
He said the new Heads of Agreement with Australia Pacific LNG, Queensland Curtis LNG and Gladstone LNG would ensure more gas was offered to the domestic market, more often, and on more competitive terms.
“As part of our JobMaker plan we are delivering more Australian gas where it is needed at an internationally competitive price, this particularly includes manufacturing businesses who employ more than 850,000 Australians, many of which rely on gas to operate,” he said.
Minister for Resources, Water and Northern Australia Keith Pitt said the strengthened Heads of Agreement commited LNG exporters to offer uncontracted gas to the domestic market first on competitive market terms before it was exported.
“It complements the Australian Domestic Gas Security Mechanism which also references the Australian Competition and Consumer Commission (ACCC) LNG netback price series,” he said.
“Both the AEMO and ACCC have found east coast of Australia has a low, but increasing, risk of facing a gas shortfall.
“We are working to get the right balance between affordable gas for manufacturers and a price that encourages new gas resource development.”
The Australian reports that the deal announced today has seen the LNG companies dodge the mooted introduction of formal price controls on supplies despite sustained pressure from manufacturers for cuts to their gas costs.
And it drew immediate flak from the Australian Workers’ Union, who described it as a capitulation to the LNG exporters.
“By rejecting price controls, or any other measures to ensure Australian gas reaches Australian employers at a reasonable price, Mr Morrison’s deal is basically identical to the weak and pointless bargain negotiated by Malcolm Turnbull,” AWU national secretary Daniel Walton said.
“This deal sells out Australian manufacturing workers to benefit a handful of multinational giants who extract our gas and export it to Asia.”
This week’s agreement follows on from Federal action in mid-2017 to ensure gas supplies for the domestic market through the introduction of the Australian Domestic Gas Security Mechanism and an initial Heads of Agreement.
The government said the spot price for gas had since dropped from $12.50 to $10.50 a gigajoule to now be between $7 to $5 a gigajoule.
Mr Pitt said the Coalition Government was also continuing with its commitments to unlock new gas supplies through the Strategic Basin Plans, with the Beetaloo Basin Plan finalised and work progressing on unlocking gas in the North Bowen and Galilee Basin.
The government has pledged up to $50 million for exploration that occurs before June 30 2022 in the Beetaloo Basin, along with $173 million for road upgrades to support the development of a gas industry based on Beetaloo gas resources.
“The Beetaloo has the potential to mirror the US shale gas revolution – bringing jobs and investment to the North while providing secure and affordable gas supplies to industry,” Mr Pitt said.
“The Australian Government will continue to work with relevant regulators and energy market bodies, including AEMO, ACCC, Australian Energy Market Commission and the Australian Energy Regulator, to build on reforms which improve the functioning of the east coast domestic gas market.
“This includes establishing an effective 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 market.”