Gas producers guarantee sufficient gas supply in 2018

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Prime Minister Malcolm Turnbull met with gas producers Santos, Shell and Origin Energy on 27 September 2017 to discuss the future of Australia’s east coast gas supply, with the gas producers guaranteeing that there will not be a shortfall of gas in 2018.

On 25 September 2017, the Australian Energy Market Operator (AEMO) and Australian Competition and Consumer Commission (ACCC) released reports which predicted surprisingly high shortfall in the east coast gas market for 2018.

“In terms of any additional gas requirements…AEMO identified additional gas requirements up to 107 petajoules of gas in 2018 on top of the expected shortfall amount – so identified 54 petajoules as an expected shortfall and then up to 107 depending on what happens with the weather and a big thermal generator breaking down and so forth – they have given us a commitment that they will continue discussing that with AEMO but very importantly, so as to ensure that if the gas is needed, it will be provided, both in 2018 and 2019,” Mr Turnbull said.

APPEA Chief Executive, Dr Malcolm Roberts, said the industry had reassured the Prime Minister that sufficient uncontracted gas would be available in 2018 to meet the new, much higher forecast of expected demand.

“There is no reason to fear that eastern Australia will run out of gas in 2018,” Dr Roberts said.

“The industry will ensure there will not be a shortfall of gas in the domestic market. The businesses present gave a commitment to the Commonwealth that all uncontracted gas will be offered to the domestic market first.

“We have also committed to improving transparency in the domestic market by reporting regularly to the Australian Competition and Consumer Commission (ACCC) on gas sales, offers to sell and bids declined.

“The industry has already moved to ensure a ready source of gas is available to meet any energy security risks by supporting the Gas Peak Demand Guarantee. This will ensure gas is always available for power generation during peak demand periods in the National Electricity Market.”

Chairman of Shell Australia, Zoe Yujnovich, said, “We have established this new business in Melbourne because we saw an opportunity to sell gas from Queensland to customers in the south east, and in the process insert much needed competition into a market with very few players.

“The company is committed to understanding demand in the market, securing gas supply and selling more gas to customers.”

Dr Roberts said the industry applauded the Prime Minister’s leadership and commitment to finding a market-based solution that guaranteed gas supply to the domestic market without harming a vital export industry.

“More gas supply and more gas suppliers is the only sustainable way to meet long-term demand and put downward pressure on prices,” Dr Roberts said.

“It is essential that state and territory governments remove their political bans on developing local gas. New South Wales and Victoria, in particular, are heavy gas users but have blocked local projects.”

Mr Turnbull said he was happy the with outcome of the meeting.

“This is very good progress today. There is more work to be done. But we have secured that guarantee from these three big gas companies, three big gas exporters that the shortfall, the expected shortfall identified by AEMO and the ACCC in 2018, they will provide the gas to meet that,” Mr Turnbull said.

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