Turnbull talks tough on gas supply before showdown with industry

Turnbull talks tough on gas supply before showdown with industry


Prime Minister Malcolm Turnbull addresses the media during a press conference at Parliament House in Canberra on Tuesday. Photo: Alex Ellinghausen

Prime Minister Malcolm Turnbull addresses the media during a press conference at Parliament House in Canberra on Tuesday. Photo: Alex Ellinghausen

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"It is absolutely vital that Australian industries, Australian businesses, Australian families have the gas they need at a price they can afford."

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It is "unacceptable" that Australia will soon become the world's biggest exporter of gas while households and businesses in the eastern states struggle with supply shortages and crippling prices, Malcolm Turnbull has said.

Firing a warning shot before his meeting with heads of the liquefied natural gas industry on Wednesday, the Prime Minister said: "It is absolutely vital that Australian industries, Australian businesses, Australian families have the gas they need at a price they can afford.

"It is not acceptable for Australia to be shortly the world's largest exporter of LNG and, yet, to have a gas shortage on the east coast in its domestic market. That is clearly unacceptable. I will be continuing the discussions and the industry knows exactly where I stand and where my government stands."

Australia is set to eclipse Qatar as the world's LNG powerhouse by 2020, but some exporters are struggling to fulfil contracts with Japan, China and South Korea, and have diverted local supply and forced prices higher.

After the March meeting with companies including Shell, Chevron, ExxonMobil and Santos, in which Mr Turnbull raised the prospect of the government using export control powers, gas bosses gave general undertakings to increase supply.

Political battle lines have been drawn over domestic gas supply, with Bill Shorten using the lead-in to the meeting to suggest Mr Turnbull will have failed if there is not an immediate fix for what the Opposition Leader said was a "crisis".

"The Prime Minister has had one talkfest with the gas companies [in March] and they must have laughed at him afterwards because nothing happened," Mr Shorten said.

"Malcolm Turnbull needs to roll up his sleeves and stand up for Australian industry. This is a real crisis and it won't wait another 12 or 18 months or five years. The problem is here and it's now.

"It is outrageous that it is possible in Japan or Korea to buy Australian gas cheaper than our own industry can buy it in Australia."

Mr Shorten has backed calls by the Australian Industry Group (Ai Group) for the government to facilitate "swap" arrangements, whereby LNG exporters - primarily Santos' GLNG venture in Queensland - could buy cheap gas on the Asian market to fill export sales contracts while freeing up local production for domestic supply.

Ai Group chief executive Innes Willox has raised the possibility of using a national interest test for LNG exports that could be forced under the Export Control Act 1982.

Australian Petroleum Production & Exploration Association chief executive Malcolm Roberts said: "There is no doubt that the market needs more gas supply. But we must solve that problem by fixing the underlying causes rather than creating new problems.

"Australia has ample gas reserves that can be developed to supply local and international customers. We need policies that expand supply rather than lock in scarcity.

"The last thing Australia needs are short-term policies that increase the regulatory burden on gas production - and therefore the cost to supply customers - and make new investment more risky.

"Exploration has fallen to its lowest level in 30 years. More regulatory interventions, as advocated by Ai Group, will not solve these problems."

APPEA has led calls for greater exploration and greater utilisation of onshore unconventional gas resources.

The industry believes the moratorium on coal seam gas production in Victoria and hold-ups in NSW amid stiff community resistance has worsened the domestic supply crisis.

The story Turnbull talks tough on gas supply before showdown with industry first appeared on The Sydney Morning Herald.

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