The Resources Minister has put gas producers on notice that the federal government intends to pull the “gas trigger” to restrict their exports, unless they can provide the nation does not face gas shortfalls in 2023.
- The federal government has warned it will pull its “gas trigger” if supply for next year is not guaranteed
- The gas industry says Australia does not face a gas shortfall, contrary to warnings
- The government will attempt to reform the gas trigger and renew it to 2030
Madeleine King says she will issue a notice to suppliers, the first step towards enforcing the Domestic Gas Supply Mechanism, directing them to provide a detailed response on supply and export forecasts for next year.
The consumer watchdog has warned that despite Australia’s abundant gas supplies, the outlook for next year was “very concerning”, with most of that supply slated for export.
It warned the government to consider intervening or face the risk of gas shortfalls in 2023.
The federal government has the power to force gas producers to restrict exports of their excess supply to ensure supply for the domestic market, known colloquially as the “gas trigger”.
The trigger was due to expire next year, but Ms King says it will be renewed to 2030 and reformed so that it can be used at shorter notice.
The minister says she will make a decision in October on whether to proceed with imposing export controls.
If pulled, the gas trigger would come into effect from January next year.
Industry promises no gas shortfalls next year
The gas industry is attempting to ward off the threat of the government pulling the gas trigger, saying it has the supply to meet consumer demands next year.
The ACCC has projected a shortfall of about 10 per cent of the nation’s gas demand next year as producers withdraw more domestic supply for export, where it can sell for a better price.
But the industry argues three times as much uncontracted gas is available for supply into the domestic market than the projected shortfall, and producers understand their “obligations” to Australian households.
In a statement, the head of the industry’s peak body, the Australian Petroleum Production and Exploration Association (APPEA), said there was no gas shortfall and no shortfall coming.
“There has never been an actual shortfall and there will not be one next year – this is the ACCC signaling that action is needed, and the industry will act,” APPEA’s chief executive Damian Dwyer said.
“Gas customers can be assured supply will be adequate next year so households and businesses can continue uninterrupted.”
The ACCC said while exporters had been “technically compliant”, some exporters have been unwilling to negotiate with the domestic market and honor a handshake agreement to engage in fair price negotiations to ensure domestic supply.
Ms King says the government will revisit those agreements with exporters, which were due to expire next year.
Mr Dwyer said pressure on the system was due to the war in Ukraine, coal-fired generation outages and “renewable energy not stepping up when required due to bad weather”, and not the gas industry.
He said prices for 2023 have increased, but Australian prices remained below international rates.
“The industry stood up when the east coast needed us this winter and we will do so again now as we have done for decades, providing safe and reliable energy supply,” he said.
The Australian Energy Market Operator was forced to intervene in the east coast market earlier this winter to cap prices and compel electricity generators to produce power.
AEMO at the time said the industry was “not able to deal” with the issues it faced and required the regulator to seize control to prevent blackouts across several states.