Malcolm Turnbull warns gas exporters a domestic shortage is 'clearly unacceptable'

Katharine Murphy Political editor
The energy market operator has predicted gas shortages by summer on the Australian east coast unless the government intervenes. Photograph: Christopher Furlong/Getty Images

Malcolm Turnbull has warned the LNG chiefs it is “clearly unacceptable” to have a shortage of gas on the east coast of Australia ahead of new talks with the industry in Canberra on Wednesday.

The talks follow an emergency meeting in mid-March where the prime minister warned the LNG industry he would use the commonwealth export powers “in the national interest” if the companies did not deliver explicit guarantees of more supply to the domestic market. They will include the chiefs of major companies, Turnbull and three cabinet ministers.

Ahead of the discussion, Turnbull told reporters it was “absolutely vital that Australian industries, Australian businesses, Australian families, have the gas they need at a price they can afford.”

He said it was not acceptable for Australia to be one of the world’s largest LNG exporters “and have a gas shortage on the east coast in its domestic market.”

“That is clearly unacceptable. I will be continuing the discussions and the industry knows exactly where I stand and where my government stands.”

A LNG tanker moored at a thermal power station in Futtsu, east of Tokyo. Most of Australia’s gas is exported with Japan and South Korea among the biggest customers. Photograph: Issei Kato / Reuters/Reuters

Gas chiefs are expected on Wednesday to provide an update of how they intend to meet a new domestic peak demand guarantee, and officials from the Australian Energy Market Operator will also attend.

The talks between the government and the LNG industry were triggered by a public warning from AEMO that there would be shortages of gas domestically by next summer if the government failed to intervene.

Ahead of the talks, the government has signalled it could be open to facilitating gas swaps, in which export contracts are fulfilled using overseas gas, to reserve more product 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 the government’s ongoing consultation with industry.

The proposal was suggested initially by the Australian Industry Group and has been supported by the Labor leader Bill Shorten.

Shorten on Tuesday said: “Malcolm Turnbull’s got one job tomorrow: It’s to bang heads and get all the businesses who are producing the gas to prioritise Australian jobs and Australian business before they export gas we need here overseas.”