ADGSM consultations commence Martin Kovacs, 24 Jul 2017

Senator Matt Canavan, the Minister for Resources and Northern Australia, has given formal notice to LNG producers that he intends to consider whether 2018 will be a gas shortfall year under the Australian Domestic Gas Security Mechanism (ADGSM).

Canavan stated that under the first step of the ADGSM he “will be consulting with the Australian Energy Market Operator, the ACCC and major gas producers and users”.

“The ADGSM is a mechanism of last resort to be applied in accordance with our international trade obligations and will only be used if there will not be a sufficient supply of gas for Australian consumers,” Canavan commented.

“The mechanism will balance domestic gas market considerations with the operational and planning requirements of a globally integrated and highly competitive export industry.”

The Australian Petroleum Production & Exploration Association (APPEA) has warned that “restricting gas exports to boost domestic supply is likely to be counterproductive”.

“The industry has tripled east coast gas production in the past five years, creating an entirely new supply from coal seam gas,” APPEA Chief Executive Dr Malcolm Roberts commented. “This is despite the political restrictions and bans imposed by some state and territory governments.

“We acknowledge the critical importance of gas in the Australian economy and support the need for more gas in the domestic market, but restricting a successful export industry is not the answer. Export controls are a sovereign risk issue for Australia, threatening the $50 B in new investment needed to maintain current supply. Restricting exports will only redistribute existing gas supply – it will not deliver new supply.

“The only sustainable solution to the challenges facing the east coast gas market is more gas supply. The government should be working with industry on regulatory reforms that reduce the cost of developing new supply. And it should continue to pressure state and territory governments to immediately remove their bans and moratoriums and consider all new projects on their merits.”

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