Chris Bowen, the federal energy minister, announced that new gas projects in Australia must not solely focus on export markets. He underscored the need for these projects to serve at least some of their output back to the local market. This announcement coincides with the Australian government releasing terms of reference for a full review of the rules that govern Australian gas markets. The terms of the review focus on the need for stable and secure gas supply to Australian consumers at an affordable price.
Bowen’s remarks spotlight a growing concern among federal policymakers regarding gas supply on the east coast. He warns that focusing only on exports could deepen the current shortages. In addition to reviewing current regulations, the government is considering consolidating three sets of rules into a more streamlined framework. This gas supply measure is intended to reduce complexity in supply chain operations across Australia’s gas market and to avoid some future gas shortages.
Review of Gas Market Rules
The Australian government is currently examining its domestic gas market regulations. This short review will serve as a reflection on how successful the current frameworks have been. This broader evaluation should consider if our current regulations are sufficient to serve local demand without undermining potential export markets. Bowen stressed that the review offers an opportunity to future-proof the east coast gas market. In doing so, he hopes to ensure a reliable and affordable gas supply for Australian households and manufacturers.
He added that “New supply entirely for export won’t address Australia’s domestic gas requirements”. The federal government’s role should be focused on protecting local consumers. It is focused on making new domestic gas supplies available to the domestic market.
The review will focus narrowly on, well, making a lot of existing regulation unnecessary. Expanded good faith consultation. The proposal aims to avoid future gas shortfalls and promote investment in Australia’s natural gas reserves. Bowen couldn’t stress enough the significance of the east coast gas market. He’s confident it needs to be fit-for-purpose to attract the new investment our vast gas resources need and stop the forecast shortfalls.
Industry Responses and Perspectives
Responses from industry stakeholders are equally supportive and critical of the federal government’s approach. Tackling cumulative impacts Samantha McCulloch from Australian Energy Producers spoke to the advantages of minimizing regulation. She enhanced the need on restoring market signals. She argues that the only way to ensure the right investment occurs through the market is for policymakers to send strong market signals.
Susan McDonald, the LNP’s shadow resources minister, slammed the federal government for continuing to intervene in the gas market. She said, “The gas market is a mess, and the government’s interventions weren’t the answer. Those policies had to go.” Her comments highlight an idea that is prominent among many industry leaders that further deregulation would attract more investment and drive more efficient operations.
The Australian gas production landscape is changing quickly. Just last month, Santos’s $3.6 billion Narrabri Gas Project (more than five times the cost of its current package) cleared major legal hurdles. Additionally, pilot projects are already underway in the Northern Territory’s Beetaloo Basin, while Woodside has lodged applications for its ambitious Browse gas project off the Western Australia coast.
Future Implications for Natural Gas
Natural gas is set to remain a key player in Australia’s energy transition for decades to come. It’s heartening that the government recognizes that real change can only happen when local needs take precedence. It creatively cuts through challenging inter-agency regulatory thickets to do so. Bowen proved especially intent on driving home the point that new supply matters. Most importantly, he argued, Australians should have the chance to benefit from it.
Last election, the Coalition took to the election a east coast gas reservation scheme. As we wrote during the passage of this plan, labor was vehemently opposed to this plan. Now the federal government is scrambling to change its tune on domestic gas supply requirements given a shifting political and economic landscape.
Talks of regulatory rollbacks are all the rage right now. Many stakeholders are excited by the prospect of meeting our growing domestic energy needs while increasing our competitiveness as an exporter. The fate of this review will clearly have major ramifications for the direction of Australia’s energy landscape for many years to come.
