Fossil gas exporters forced to give Australia “first rights” at reasonable prices – for new contracts only

Australia’s big fossil fuel exporters will be forced to put aside up to a quarter of their gas for the local market under a national reservation scheme.

Exporters will need to reserve from 15 to 25 per cent of gas production for the domestic market for new contracts, with the exact proportion to be ironed out after consultation.

The scheme is designed to ease forecast shortfalls in domestic gas supply and exert downward pressure on prices, the federal energy minister said on Monday.

“Most Australians think that Australians should have first rights to the gas that’s under Australian soil, Australian waters and that gas should be available to Australians at reasonable prices,” Chris Bowen told reporters in Canberra.

“Australians are right about that.”

The reservation regime will come into play immediately but only apply to new contracts.

Western Australia has long had a gas reservation scheme and Mr Bowen’s announcement will bring a similar policy to the east coast.

Industry Minister Tim Ayres said secure and affordable gas supply was critical to keep Australian manufacturing firms afloat.

“Our government is supporting heavy industry to decarbonise as much as possible – but not every facility can and some use gas as an irreplaceable feedstock,” he said.

“This is one of the reasons we will introduce a domestic gas reservation scheme.”

Australian Conservation Foundation (ACF) says the gas reservation scheme means Australia doesn’t need to exploit new gas fields.

“Australia does not have a gas supply problem, it has a gas export problem, with 80% of our gas going to the export industry, which has been ripping off Australians for years,” said ACF national climate and energy policy adviser Annika Reynolds

“It will be important that a reservation scheme re-directs gas from existing export projects to the domestic market, not facilitates new climate-heating gas projects.

“As the world hurtles towards 2.5°C of warming, a gas reservation scheme must not be allowed to artificially inflate the viability of big new gas projects at Narrabri and the Beetaloo Basin.”

Innes Willox, the CEO of the Australian Industry Group (AIG) said the decision had been a long time coming, but was “welcome all the same.”

“The best time to announce a national gas reservation policy would have been in 2007 and 2008, before any contracts were locked in for the wave of LNG export terminals that transformed Eastern Australia’s gas market and ever since sent local prices soaring, Willox said on Monday.

“The second best time to enact a system to guarantee local supply is right now.

“Today’s announcement is high-level and there remain important details to settle. But today’s announcement is welcomed by industry and marks a clear dividing line: from this point forward, the opportunity to export gas comes with domestic responsibilities which will play an important part in the ongoing survival of crucial local industries.”

Less happy with the news, however, was Greenpeace Australia Pacific, which warned the new gas reservation policy risks keeping Australia “hooked” on the high polluting fossil fuel.

“If implemented effectively, this reservation policy should mean no new gas projects are needed — but without strong guardrails, it risks entrenching our dependence on expensive, harmful fossil fuels even further,” Greenpeace AC campaigner Geoff Bice said. 

“Opening new gas fields will only lock us into decades of pollution, and delay the transition to the cheaper, cleaner renewable alternatives. Creating more gas dependency is not the solution. We need to urgently move away from the fossil fuels of the past.”

Source: AAP