TWO of Australia’s most powerful oil and gas industry lobby bodies have expressed concerns over the future of the energy supply network following the recent meeting of the Council of Australian Government (COAG) Energy Council.
Speaking out immediately after the meeting, Australian Pipeline and Gas Association (APGA) chief executive, Cheryl Cartwright, said the energy ministers did not appear to understand the gas supply issues facing the nation.
Ms Cartwright said their decision to prioritise pipeline regulation above all other aspects of the gas market was “very disappointing”.
“The meeting communique noted that a key issue for gas market reform would be to increase the overall supply and the number of suppliers, but more pipeline regulation will do nothing to deliver those increases,” she said.
“The pipeline industry accepts sensible change such as proposals from the Australian Energy Markets Commission to introduce new gas markets, capacity auctions and trading platforms to improve the operation of the gas market.
“By choosing to prioritise consideration of the Australian Competition and Consumer Commission (ACCC)’s recommendation on pipeline regulation, there is a very real risk of delaying the widely accepted AEMC proposals.
“The continued fascination with pipeline reform is inexplicable when transmission costs make up such a small proportion of a user’s gas bill – less than five per cent for households and less than 10 per cent for large users like manufacturers.
“Six years ago, the wholesale price of gas was $3 and transport costs were $1. Now the wholesale price of gas is more than $6 and transport prices are still $1.”
The Australian Petroleum Production and Exploration Association (APPEA) said that any gas supply strategy needs to be national and needs to include Victoria, which currently has a ban on gas exploration.
“The east coast gas market is at a tipping point. Tight market conditions are already inflicting real economic and social costs,” APPEA chief executive, Dr Malcolm Roberts, commented.
“Governments have been warned by their own agencies that we risk a supply shortfall by 2019 if new gas reserves are not developed urgently. And the states that are the most vulnerable are the ones that have not developed their own resources.
“Victoria must lift its onshore gas moratorium for the sake of local customers and industry. There is no environmental justification to prohibit onshore gas exploration and development.
“Without firm action from all states, families and businesses will face higher energy costs, investment in manufacturing will be threatened, and Australia’s transition to a low emissions future will be much more difficult.”
Dr Roberts said a report prepared by APPEA for COAG highlighted the positive impact onshore gas was making to the Australian economy and regional communities.
He said Australia was already dependent on unconventional gas reserves with coal seam gas (CSG) accounting for 90 per cent of reserves on the east coast and 40 per cent of consumption.
“The Unconventional Gas in Australia report shows an industry that is safe and successfully co-existing with agriculture and other land uses,” Dr Roberts said.
The APPEA chief executive said the association did welcome the energy minister’s support for gas.
He said the outcome of the Energy Council meeting confirmed the critical importance of gas to Australia’s energy supply equation.
“The implementation plan for the Gas Supply Strategy is a welcome move to encourage more competition and transparency in the east coast gas market,” Dr Roberts said.
“APPEA supports the establishment of a reform group to drive the changes recommended by the Australian Competition and Consumer Commission and the Australian Energy Market Commission.
“It is important that work on these reforms starts quickly, with industry and consumers involved at all stages.
“But the strategy and market reforms can only achieve so much if some governments maintain or threaten new regulatory restrictions on gas development.
“The essential ingredient for a gas market is gas,” Dr Roberts said.