The government may be open to facilitating gas swaps, in which export contracts are fulfilled using overseas gas, to keep more for Australia’s domestic supply.
The resources and northern Australia minister, Matt Canavan, told Radio National on Monday evening it was realistic that the government could help private companies arrange swaps and the idea was part of its consultation with industry.
The proposal was suggested by the Australian Industry Group in a letter on Thursday and has been supported by Labor’s Bill Shorten as part of the solution to a looming gas “crisis” he said threatened Australian jobs.
Ai Group noted “there are large volumes of gas available on international spot LNG markets” at what it called “modest” prices, but domestic supply was “extremely tight”.
It suggested that commitments made by Australian exporters to overseas customers could be met with gas from outside eastern Australia, freeing up local gas to be sold into the domestic market.
Ai Group noted potential barriers to the swap plan including uncertain contract terms, but suggested the government could help overcome these by acting as “a neutral and trusted player able to acquire and collate the necessary information, much of which is highly commercially sensitive”.
I think I’ll stay married to my wife and I do think the Galilee basin will be developedResources minister Matt Canavan
Ai Group also favoured a national interest test for gas exports, which Labor took as its policy to the 2016 election.
Shorten said Australia needed to do “everything we reasonably can to ensure Australian manufacturers can access domestic gas at a decent price”.
“The government should help facilitate an arrangement where LNG ventures that are not currently net suppliers to Australia should be able to voluntarily come to arrangements where Australian gas is ‘swapped out’ for international gas, and diverted back to Australian customers.”
Shorten said the plan would mean “cheaper, more secure gas and ensure contracts are honoured”.
“The government must play an active part in a deal that will see gas diverted back to Australian industry.”
On Monday, Canavan said he had not looked at the Ai Group proposal in detail yet, but he accepted that more needed to be done. He said the government had received commitments from producers to boost domestic gas supply and he would get an update this week on their efforts to do so.
“If that doesn’t happen, we have said that we reserve our rights ... on powers over exports,” he said, suggesting that a gas reservation policy was still on the table although he said it was not the preferred outcome.
Asked about swap arrangements, Canavan said he “had detailed conversations with gas-producing companies about those types of options”.
“Obviously it’s a matter for commercial negotiation, those details, it’s not for the government to negotiate gas contracts with users in Asia.
“But certainly the type of arrangements the AiG are foreshadowing there are realistic, and they are at the heart of discussions between the government and industry.”
Canavan summarised the proposal by saying that the domestic gas price is “often quite a bit higher” than in Korea and Japan, creating a potential arbitrage where producers could “buy low and sell high ... if you can supply it from other sources” such as Qatar or the United States.
Canavan also talked up the possibility that a potential $900m concessional loan from the Northern Australia Infrastructure Facility could open up the Galilee basin to projects beyond the Adani Carmichael coalmine. He said this could create up to 15,000 direct jobs.
Challenged on the claim, Canavan said the figure came from “detailed modelling and the environmental impact statements” of the adjoining proposed projects.
Although the government has been spruiking the figure of 3,000 jobs to come from the Adani mine, evidence commissioned by Adani itself has suggested the number is likely to be nearer 1,500.
Canavan said he accepted there was always “uncertainty in life” and made an analogy between the uncertainty on the number of jobs created and the stability of his marriage.
“I hope I stay married to my wife and have a great relationship with my kids, but I can’t foretell the future ... I think I’ll stay married to my wife and I do think the Galilee basin will be developed.
“So there’s always risk,” he said, suggesting the rail line was appropriate for public subsidy because governments were the ones that could “take that risk on board”.