The Turnbull government will seek guarantees from Australia’s gas chiefs that more supply will be made available for peaking demand, and more will be directed at the domestic market, during emergency talks on Wednesday.
The prime minister summoned the gas chiefs to Wednesday’s crisis meeting in Canberra after the Australian Energy Market Operator issued a pointed warning last week that New South Wales, Victoria and South Australia were likely to face gas shortages as of the summer of 2018-19.
As part of a mind-focusing exercise before the talks, the government signalled it was prepared to impose a domestic gas reservation to ensure more supply reached the Australian market despite public warnings from Australia’s competition regulator that such a policy would threaten new investment.
The energy minister, Josh Frydenberg, has spoken favourably about a Queensland government policy that reserves a specific area for development of domestic supply only. Before Wednesday’s meeting, the Palaszczuk government signalled it would help open its significant gas reserves to address looming shortfalls.
The prime minister, Malcolm Turnbull, said his purpose was to “find solutions”.
“Australians need to be assured of reliable and affordable energy,” the prime minister said. “Government and industry recognise the need to work for secure and competitive energy markets that bring forward gas supplies and help to lower emissions.”
Turnbull noted the government was committed to protecting jobs in the manufacturing sector, an observation that followed a stark warning on Tuesday from Rid Sims, the Australian Competition and Consumer Commission chairman, that Australian manufacturers would go the wall unless there was prompt intervention to boost domestic gas supply.
Sims issued public advice to gas companies on Tuesday that their interests would be best served by looking to support the domestic market rather than directing most of their product overseas. He noted they could desist from selling gas on the LNG spot markets above meeting their contractual commitments.
Before Wednesday’s session, the prime minister also called on the gas companies to help turn around community opposition to gas exploration and development that had led to state governments imposing moratoria on new development. “The only sustainable way to guarantee affordable gas reserves is through the responsible development of our gas,” Turnbull said.
Wednesday’s meeting will be attended by Turnbull and three portfolio ministers – Frydenberg, Arthur Sinodinos and Matt Canavan – and the chief executives of nine gas companies, including Santos, Shell Australia, Origin and Exxon Mobil, as well as the industry association, Appea, the Australian Petroleum Production and Exploration Association.
It follows a dramatic intervention in the energy debate by the South Australian government on Tuesday.
The South Australian premier, Jay Weatherill, unveiled a $550m energy plan to shore up the state’s electricity market. The Weatherill blueprint involves a new $360m state-owned gas-fired power plant, new battery storage and the premier has also pledged to provide 10% of gas royalties to landholders who allow access for conventional gas and fracking development.
The Turnbull government has warned Weatherill that his plan, which includes new powers to issue directions to the energy market operator during periods of high demand, could breach the national electricity market rules.
The premier insists his plan does not breach the rules.
Before Wednesday’s meeting, the Labor leader, Bill Shorten, criticised the government for not including the states and representatives of Australian manufacturing. “It defies sense to leave the groups who control many of the levers on gas policy, the states – and its biggest consumers, the manufacturing industry – outside the room,” Shorten said.
The Labor leader said the prime minister was intent on “asking the gas companies to solve the crisis for him”.
Shorten said immediate action needed to be taken to secure domestic supply and he said Labor’s policy would impose a national interest test that would reserve gas supply for domestic users if needed.
“Labor’s policy is clear: there must be a local gas available for local industry,” Shorten said. “We must look at all viable options to secure our domestic gas supply and we need real leadership, otherwise tens of thousands of Australian jobs will go.”