Australian Energy Producers (AEP) will recommend a prospective reservation policy as part of a suite of actions to deliver more gas supply to the domestic market and provide certainty to gas producers and users.
In a submission to the Gas Market Review, Australian Energy Producers said a collaborative approach is needed to deliver enduring and sustainable solutions to future-proof the gas market and break the cycle of short-term fixes, market interventions and looming shortfalls.
“The Government’s Future Gas Strategy makes it clear that natural gas will remain critical to Australia’s energy security through to 2050 and beyond,” Australian Energy Producers Chief Executive Samantha McCulloch said.
“This requires a strong, stable and competitive east coast gas market that delivers more gas when and where it’s needed, while providing certainty for existing and future investment.
Ms McCulloch said a well-designed, prospective reservation policy linked to new supply could support a competitive and well-supplied domestic gas market but must be backed by actions to increase supply and address near-term market pressures.
“This should include reforms to encourage more investment, streamline approvals, remove reporting duplication, and facilitate expanded gas pipeline and storage capacity. Actions must also support a robust LNG sector which goes hand-in-hand with a well-supplied domestic market.”
Ms McCulloch said a strong LNG sector was critical for Australia’s energy security, as Queensland’s gas exports will continue to underpin investment in new gas supply and provide flexibility for the domestic market.
“Australia’s abundant natural gas resources have underpinned decades of economic growth, providing generations of Australians with reliable and affordable energy.
“With the right policy settings, we can encourage the investment needed to grow the market and ensure ample gas is available to meet Australia’s long-term energy demand and remain a reliable energy partner in our region.
“Industry stands ready to work with governments and energy users to safeguard Australia’s future energy needs, put downward pressure on prices and ensure Australia’s vast energy resources remain a major competitive advantage for our economy,” Ms McCulloch concluded.
Recommendations to deliver reliable and affordable gas
Australian Energy Producers recommends a three-track approach to ensuring reliable and affordable natural gas supply today and over the long-term.
Gas market reform to ensure reliable and affordable gas for the long-term:
- Establish a prospective east coast gas reservation, that is: prospective and linked to new supply, accompanied by immediate action to support new gas supply, aligned to future domestic gas demand, allows the market to determine prices, and flexible.
- Minimises sovereign risk and ensures Australia remains a reliable energy partner to the region.
- Sunset the Gas Market Code, Heads of Agreement and Australian Domestic Gas Security Mechanism in parallel with gas market reforms.
- Establish a sustainable gas exploration programme.
- Ensure the importance of natural gas and carbon capture, utilisation and storage is reflected across energy and climate policies.
Actions to accelerate additional gas supply and streamline approvals:
- Fast-track ‘development ready’ gas supply.
- Streamline and strengthen approvals for new and expanded gas projects.
- Facilitate an increase in pipeline and storage capacity.
Immediate steps to improve market functioning and efficiency as the market transitions:
- Streamline short-term market operations.
- Remove duplication and harmonise gas market reporting.
Australian Energy Producers is committed to working with Federal, state and territory governments, gas users and stakeholders on robust and enduring east coast gas market reforms, including the design of a prospective east coast reservation policy linked to new supply.