The Prime Minister has put gas exporters under the scrutiny of the Australian Competition and Consumer Commission for three years after all of them failed to commit to affordable gas supply for homes and businesses.
The decision was made after no progress was registered in a followup meeting that the PM had with CEOs on Wednesday. This is the second time that the PM has brought in the watchdog, with it also being asked to investigate allegations of price gouging by electricity retail giants last month.
Gas exporters given one week to explain plans – or face new regulations
Mr Turnbull has given exporters a week to explain how they are going to ensure affordable supply of gas, or face new regulations.
There appeared to be little progress from the original meeting, at which two of the three Queensland LNG projects had committed to being “net domestic contributors as part of their social licence”, while Santos-run Gladstone LNG — took the request on notice.
There were no concrete measures announced to ensure growing supply for domestic users, something that would require more production or a reduction in exports, or both.
The problem is that NSW, Victoria and the Northern Territory are restricting onshore gas production, meaning there is little he can do.
LNG exports are sold via long-term LNG contracts to international buyers, so if the government were to intervene, it could raise sovereign risk concerns.
Second inquiry in the space of a month
Instead, the government has once again turned to the ACCC and its powers to look into the details of confidential gas contracts.
The new ACCC inquiry will run over three years, with six monthly reports, and would look at supply, the pipeline sector and measures to improve transparency of opaque gas supply contracts.
This monitoring will hold the suppliers to account with respect to their commitments to make more gas available to the domestic market and LNG exporters with respect to their commitment to be net domestic gas contributors.
The industry, including pipeline operators and generators and the Australian Energy Market Operator, is developing a plan to ensure gas is delivered at times of peak electricity demand to prevent blackouts.
The arrangement will be in place by October in time to prepare for the next summer.
Exporters asked how they will address short term issues
Prime Minister Malcolm Turnbull said the government had asked the exporters to provide more information on how they will address the short term market issues.
He said this new measure would “shine a light” on transactions within Australian gas market and help it operate more fairly and efficiently.
“It will increase transparency, facilitate competition and ensure the gas market is operating well,” Mr Turnbull said.
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