The Morrison government’s ‘gas fired recovery’ has never really been about boosting gas supplies for local consumers, with industry representatives telling a senate hearing that gas projects in areas like the Beetaloo Basin are dependent on being able to sell more gas offshore.
The concession came from a representative of oil and gas producer Santos on Friday, during hearings for an inquiry into the development of the Northern Territory’s Beetaloo gas basin.
The Morrison government has consistently claimed that the expansion of gas production in the Beetaloo Basin and other gas basins was necessary to increase supplies to domestic consumers to avoid a shortfall and that it formed a “key element of the gas-fired recovery.”
But Santos’ strategic advisor for external affairs, Tracey Winters, told the senate inquiry that Australia’s domestic gas market was too small to support the scale of gas projects being developed in the Beetaloo Basin and at least four other gas basins being developed with the support of subsidies from the Morrison government.
“The reality is that the scale of investment required in the Beetaloo, just like the scale of investment that was required in the Surat Basin, and that was required on the North-west shelf, can’t be supported by the domestic market in Australia alone, because the domestic market is too small,” Winters said.
“I think Australia is a very important LNG supplier to the region for security reasons. And at the same time, it allows us to develop gas for the domestic market as well, which wouldn’t be able to be developed by relying on the domestic market alone.”
Santos rep Tracey Winters tells a senate inquiry that the company's developments in the Beetaloo Basin "can't be supported by the domestic market in Australia alone, because the domestic market is too small".
It's less about boosting local supplies and more about exporting gas. pic.twitter.com/mp2bBzzmvR
— Michael Mazengarb (@MichaelM_ACT) March 24, 2022
The Morrison government has provided significant funding to the gas industry – running to the hundreds of millions of dollars – that are subsidising the development of five new “strategic” gas basins, including those in the Beetaloo, Bowen and Galilee Basins.
The government has said such subsidies were necessary to support new projects that would increase the supply of gas for domestic consumption, preventing a claimed shortfall of gas in the East Coast gas market.
Federal energy minister Angus Taylor has frequently sought to raise fears of “European style” gas shortages in Australia, if the gas projects did not go ahead.
But the admission from a Santos representative, that the development of the Beetaloo gas basin was dependent on companies being able to send the gas offshore, highlights the apparent inconsistencies between what is being claimed publicly by the Morrison government and the underlying priorities of Australia’s gas industry.
Australia is a major producer of fossil gas, with production already at around four times the volume of gas consumed domestically, with the remaining three-fourths of Australia’s output sold overseas.
Claims that Australia faces a looming shortage of gas belies the sheer volume of gas excess gas that is able to be exported into overseas markets.
If a shortage eventuates, it will be because local producers have opted to sell the gas to overseas buyers, rather than supplying gas to domestic consumers.
As the ACCC has detailed, around two-thirds of Australia’s gas production is already allocated to meeting long-term LNG supply contracts that gas producers signed with overseas customers, and there is no predicted shortfall for gas in the immediate future.
So the decisions by the Morrison government to continue providing generous subsidies for the further expansion of Australia’s gas industry – including a further $50 million provided just this week – will likely only work to send even more gas offshore.
As Santos conceded, Australia’s local gas needs are too small to justify the massive expansion of production that the Morrison government is aiming for.
Director of climate and environment at the Australasian Centre for Corporate Responsibility, Dan Gocher, said Santos had confirmed what many had long suspected, that the expansion of Australia’s gas industry was really about supporting the gas industry to send more fossil fuels offshore.
“At long last, the truth behind the gas-fired recovery has been revealed,” Gocher said.
“The Federal government has long claimed that the gas-fired recovery was about meeting a supposed shortfall in domestic supply. Taxpayer subsidies are being used to prop up dud investments by gas companies, plain and simple.”
“The reality is that the development of the Beetaloo Basin, and other new basins, is entirely about supplying LNG export terminals.”
