A new Heads of Agreement (HoA) between the Australian Government and East Coast LNG Exporters will aim to ensure gas supply amid a forecast risk of energy system pressures next year.
The HoA comes as part of a package of measures to prevent a gas supply shortfall and deliver secure, competitively-priced gas to domestic customers.
The new Heads of Agreement includes:
- LNG exporters to first offer uncontracted gas to the domestic market, on competitive terms, with reasonable notice, before exporting
- In respect of uncontracted gas, the principle that domestic gas customers will not pay more for the LNG exporters’ gas than international customers
- Commits LNG exporters to offering gas on terms consistent with a code of conduct
- Enhanced transparency and accountability, with quarterly compliance reporting to the Minister for Resources, with oversight by the competition regulator the ACCC
The negotiations ensure additional gas supply, improving security and affordability of domestic gas supplies in future years, while also introducing transparency measures to improve the information available to customers.
In July, the Australian Competition and Consumer Commission forecast a gas shortfall of 56 petajoules (PJ) for the domestic market in 2023.
The new commitments from LNG exporters will lead to an extra 157PJ for the domestic market in 2023, with the gas to be supplied in line with seasonal demand.
The new Heads of Agreement was signed by Federal Minister for Resources and Northern Australia, Madeleine King, and representatives from Australia Pacific LNG (APLNG), QGC Pty Ltd (operator of QCLNG), and Gladstone LNG (GLNG).
Minister King said the agreement will ensure Australians continue to have access to secure and reliable gas.
“The new supply commitments, and Heads of Agreement, will deliver gas to the domestic market when needed, and ensures future uncontracted gas will be offered to the domestic market first, on competitive and reasonable terms, before it is offered for export,” Ms King said.
“Given the agreement means the projected shortfall will be avoided, I am satisfied I do not need to take steps to activate the Australian Domestic Gas Security Mechanism at this time.
“This is a great outcome for Australia, will strengthen confidence in the domestic gas market and safeguard our global reputation as a stable and reliable energy exporter to our regional partners.”
The Australian Petroleum Production & Exploration Association’s (APPEA) Chief Executive, Samantha McCulloch, said the new HoA confirmed the industry’s commitment to ensure domestic gas supplies while fulfilling obligations to trading partners and investors.
“The industry has always been committed to delivering reliable and competitively priced gas supplies to the domestic market and today’s agreement confirms that,” Ms McCulloch said.
“The importance of gas in our energy mix has never been clearer. Australian households and businesses can be assured that local supply will continue to be prioritised, despite broad energy market challenges locally and globally.”
