Analysis and Commentary

More gas available for customers, but have manufacturers noticed?

Analysis and Commentary

By Peter Roberts

The federal government has secured ‘more gas at reasonable prices’ to be made available for Australia’s east coast gas users through a new supply deal with Walloons, part of Shell, according to the government.

An additional 40 petajoules will be made available for the domestic market for gas power generation between now and 2027 though an enforceable supply commitment with Walloons under the government’s Gas Code of conduct.

The announcement is in addition to commitments made by Esso, Woodside, Senex and APLNG, and brings the total volume of enforceable gas supply commitments secured for households and businesses through the Gas Market Code to more than 600PJs.

However these claims need to be put un perspective of the fact that in 2021-22, around 76 percent of domestic natural gas production was exported, often without companies paying significant taxes.

This focus on export created an east coast gas shortage where local manufacturers found it impossible to secure long term gas contracts at reasonable prices.

One example of the result was the closure in 2021 by Incitec Pivot of its Gibson Island fertilisers plant, forcing the import of hundreds of thousands of tonnes a year or urea fertilisers needed by agriculture.

There is something of a silver lining in the Gibson Island closure – Incitec Pivot and Fortescue Future Industries (FFI) are planning to develop a green hydrogen plant, and convert the Gibson Island ammonia plant into a green ammonia production facility.

But this doesn’t negate the fact that the Gibson Island story is repeated across industry with companies looking hard at the economics of manufacturing in Australia, or curtailing their operations.

Even the media release from Climate Change and Energy Minister Chris Bowen conceded that these supposed extra supplies of gas are not the answer.

According to the statement: “In March the Australian Energy Market Operator acknowledged the beneficial impact the Albanese Government’s Gas Code was having on the supply outlook, particularly in key Southern demand areas.

“AEMO confirmed the legally enforceable supply commitments have pushed back projected shortfalls by two years, to 2028.”

So we still are in great shortage, just the gas supply crunch has been pushed back for a couple of years.

Well Mr Bowen, industry is not impressed with these regularly applied band aids announce in glowing press releases when the basic problem remains the same.

Australia exports too much gas, not leaving enough for current local use, let alone for local industry expansion.

This is something the government could fix with the stroke of a pen, but just will not.

Further reading:
Incitec Pivot fails to secure gas supplies, to close Gibson Island
Fortescue and Incitec Pivot strike green gold at Gibson Island

Picture: Incitec Pivot’s Gibson Island facility, closed due to lack of gas supply.

Share this Story
Analysis and Commentary

Stay Informed

Go to Top