Gas reservation under consideration: Canavan

A gas reservation is under consideration by the federal government following several years of resistance to the idea from both sides of federal politics, with  resources minister Matt Canavan citing the success of the reservation scheme in WA. 

Reuters and others report that policies including pipeline access, pricing transparency and a reservation scheme would be examined by the government, which would consider its options until February 2021.

“Imitation’s the best form of flattery and what we’re seeking to do is imitate the best things about what is working in the west and possibly apply it to eastern Australia,” Canavan said on Tuesday.

“Our market is different over here, we’ve got multiple state governments, a pipeline network that straddles those jurisdictions, so we’ve got to work through a lot of issues.

“That’s why we’re going to have those discussions in a diligent, considered way in coming months and formulate whether or not we can do something to reserve gas here in eastern Australia for our own use.”

WA has required for over a decade that 15 per cent of its gas be sold domestically.

The joint announcement by Canavan and energy minister Angus Taylor comes after calls for action have intensified in recent months. Australia became the world’s largest exporter of liquefied natural gas in November. Meanwhile, wholesale prices have tripled in the last five years, according to some estimates. Dow Chemical and polystyrene cup maker Remapak are among manufacturers that have cited gas in recent decisions to shut their factories.

Recommendations that a reservation scheme be adopted or at least considered federally have come from the Australian Competition and Consumer Commission, the Institute for Energy Economics and Financial Analysis, Manufacturing Australia and the Energy Users Association of Australia. Peak oil and gas group Australian Petroleum Production and Exploration Association is strongly opposed, and believes bringing more gas onstream is the solution.

Industry group Chemistry Australia said reforms to the market are urgently needed, with a situation that is harming manufacturers, particularly those in its sector. 

“We are pleased to see the Federal Government will bring forward the scheduled review of the Australian Domestic Gas Security Mechanism and consider establishing a national gas reservation scheme in line with the long-term interests of domestic gas users,” said the Chemistry Australia CEO Samantha Read.

“We’ve urgently called for government intervention to address the dysfunction in Australia’s gas market on the east coast, so as not to lose manufacturing capability and further strip complexity from Australia’s economy.”

Any reservation policy would only apply to future developments, and would not affect WA.

“Reservation is worth investigation given the success of WA and to some extent in Queensland,” said Australian Industry Group chief executive Innes Willox, who cautioned that a variety of policy measures were needed.  

“Such a policy would likely be prospective in nature and take years to deliver results. It would not replace the need for more immediate measures particularly given the vulnerability of gas intensive industry.”   

Picture: ABC/Jessica van Vonderen

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