Senior figures in Australia's upstream gas sector have hit out at plans for intervention in the heavily regulated industry, as debate continues on how to best address domestic supply shortfalls later this decade.
The federal Coalition in March announced National Gas Plan including a 50-100 PJ/yr (1.34bn-2.68bn m³/yr) domestic reservation system aimed at forcing the three LNG exporters based in Queensland's Gladstone to direct more supply to the eastern states' market. But oversupplying the market to drive down prices would destroy the viability of smaller gas projects, Australian independent Beach Energy's chief executive Brett Woods said at a conference in Sydney on 1 April.
The domestic-focused firm, which will export some LNG volumes via its Waitsia project in 2025, warns that such a move by the Peter Dutton-led opposition would reduce export incomes while harming Australia's international reputation. The volumes impacted by the policy could reach around 900,000-1.8mn t/yr.
Expropriation of developed reserves is equivalent to breaking contracts with LNG buyers and with the foreign and local investors that the country needs for ongoing economic security, Woods said on 1 April. Domestic gas reservation systems put in place by the state governments of Western Australia (WA) and Queensland, designed to keep local markets well supplied, were "clearly supportable", Woods said, but only future supply should be subject to the regulations.
LNG terminals, which represent about 70pc of eastern Australia's total gas consumption and shipped 24mn t in 2024, should not be blamed for the failure of governments to expedite new supply and plan for Australia's gas future, head of Shell Australia Cecile Wake said in response to the Coalition's proposal. Shell's QGC business supplied 15pc of its volumes to the local grid, with the remainder shipped from its 8.5mn t/yr Queensland Curtis LNG project, Wake added.
Canberra has moved to promote gas use as a transition fuel to firm renewable energy in line with its 2030 emissions reduction targets, but progress has been slow as reforming laws appear to be hampering development. The state governments, particularly in gas-poor Victoria and New South Wales (NSW), must recognise the need for locally-produced supply and streamline the approvals processes, especially environmental permits, executives said.
But despite pleas for an end to years of interventionist policy — including the governing Labor party's measures to cap the price of domestic gas at A$12/GJ, Australia's fractured political environment and rising cost of living has sparked largely populist responses from its leaders. A so-called "hung" parliament is likely to result from the 3 May poll, with a variety of mainly left-leaning independents representing an anti-fossil fuel agenda expected to control the balance of power in Australia's parliament.
LNG debate sharpens
Debate on the causes of southern Australia's gas deficit has persisted, and the ironic outcome of underinvestment in gas supply could be LNG re-imports from Gladstone to NSW, Victoria and South Australia, making fracked coal-bed methane — liquefied in Queensland and regasified — a likely higher-emissions alternative to pipeline supply.
Several developers are readying for this possibility, which is considered inevitable without action to increase supply in Victoria or NSW, increase winter storages or raise north-south pipeline capacity.
Australian pipeline operator APA appears to have the most to lose out of the active firms in the gas sector. APA chief executive Adam Watson this week criticised plans for imports, because relying on LNG will set the price of domestic gas at a detrimental level, raise emissions and decrease reliability of supply, Watson said.
The firm is planning to increase its eastern pipeline capacity by 25pc to bring new supplies from the Bass, Surat and Beetaloo basins to market. But investment certainty is needed or Australia will risk needing to subsidise coal-fired power for longer if sufficient gas is unavailable to back up wind and solar generators with peaking power, Watson said.
