LNG

The Australian Government plans to extend a natural gas price cap through mid-2025 while seeking to relax its attitude towards LNG exporters who have already agreed to domestic gas supply commitments.

Australian ministers in the new Labor government are scheduled to meet in the coming week after the Australian Energy Market Operator triggered the Gas Supply Guarantee Mechanism for the first time since the measure was introduced in 2017 to secure domestic gas for power generators amid potential shortfalls in southern states.

New Prime Minister Anthony Albanese took office after his Labor Party defeated former PM Scott Morrison and his conservative Liberal-National coalition in the May 21 parliamentary elections.

Increased winter demand for energy, unscheduled outages at coal-fired power stations and gas shortages due to the war in Ukraine have led to soaring gas and electricity prices across Australia.

Energy Minister Chris Bowen said he would convene the meeting next week.

“After being sworn in I spent the morning being briefed by my department and by AEMO on the current situation on gas supply and the energy markets particularly in the East Coast,” said Bowen.

“I’ve also spoken his morning to the Treasurer and Energy Minister of New South Wales Matt Kean, to the Energy Minister of Victoria Lily D’Ambrosio, the Energy Minister of Queensland Mick de Brenni, the Energy Minister of Tasmania Guy Barnett, the Energy Minister of Western Australia Bill Johnston, and the Energy Minister of South Australia Tom Koutsantonis,” he explained.

“I’ve also briefed the Treasurer and the Resources Minister Madeleine King and the Industry Minister Ed Husic on the current situation,” he added.
There have been calls for the government to pull the gas trigger, known as the Australian Domestic Gas Reservation Mechanism, to divert exports and shore up domestic supply.

Gas price surge

Bowen said any use of the emergency mechanism wouldn’t impact gas prices in the short term.

“That’s a misunderstanding of how the mechanism works. It cannot come into force until January 1 next year,” he told reporters in the capital Canberra.

Bowen stated that he did not hold the former government accountable for any particular element of the crises Australia was facing.

“For the very serious situation we are facing. I do say this though: the former government’s nine years of denial and delay, their 23 energy policies, their ad hocery, their challenges in approaches have left Australia ill-prepared and our energy markets ill-prepared for the challenges we are facing today in relation to gas and energy supply,” he said.

“The previous government did not do the work necessary to increase renewables, to increase storage. If we had more storage and more renewables and better transmission, we would be much better placed to deal with the current challenges,” he added.

“And that’s, of course, exactly what our Powering Australia plan seeks to implement. But, of course, it will take some time to implement,” stated Bowen.

Opposition Leader Peter Dutton called the characterisation of the former conservative government’s policies as a “complete rewrite” of history.

“This government went to the election saying they had the answers and clearly they don’t. You look at Chris Bowen now, he is like the bunny in the headlights and he has no idea which way to go,” stated Dutton.

“This is nothing to do with renewables. I think the government has to take responsibility for what is a serious issue,” added Dutton.

“It seems to me that the inexperience of both Anthony Albanese (the new Prime Minister) and Chris Bowen is shining through. They have got the ability and the legislation there to deal with this and they don’t know what they should do,” stated Dutton.