Australian government set to restrict gas exports

Posted: 27 April 2017 9:51 am

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Domestic supplies are insufficient and prices are too high.

The Australian government has warned it may soon apply restrictions to gas exports in order to bolster domestic supplies, protect manufacturing jobs and keep prices low.

During an interview with ABC's AM program, Minister for Resources Matt Canavan said the federal government may intervene as it is currently unsatisfied with the level of gas available to Australians.

"We are still not at the point where our manufacturing sector has adequate supplies," Canavan said. "We don't want to see a situation where gas prices here are higher than they are in the export markets we are exporting to. That is untenable and not an appropriate outcome."

Despite this aversion, Canavan confessed there were already instances where it was cheaper to buy Australian gas in Asia, rather than purchasing it domestically. If local shortages were forecast and the government was to intervene, producers would need to show how they could return supplies to surplus.

One way would be to buy gas on Asia's spot market in order to fill export contracts, ABC News reports.

Restrictions could be imposed as soon as 1 July 2017. However, Canavan admitted that the government would prefer not to get involved, citing self-regulation as the most optimal outcome.

"If shortfalls don't emerge, if more gas does come back onto domestic markets, we won't need to activate the mechanism and that would be ideal," he said.

NAB's Gas and LNG Market Outlook: January 2017 showed new gas terminals in Western Australia, Queensland and the Northern Territory would give Australia the world's largest LNG production capacity.

The report suggested this would increase wholesale prices with big businesses already feeling the squeeze and inflationary costs likely to be passed on to Australian households.

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