The Treasurer Scott Morrison directed the ACCC to establish a monitoring regime by using its inquiry powers to compel the gas industry to provide information after yesterday’s much-talked about gas summit in Canberra failed to find a solution to find a solution to the crisis threatening to keep forcing up prices, putting manufacturers out of business and costing hundreds of jobs.
Yesterday’s meeting stopped short of bringing in measures to free-up more gas supplies for domestic users on the east coast.
Nor did it look at restricting LNG exports that some manufacturers are demanding to tackle prices that have more than doubled in some contracts.
The government did not push for “gas swaps” proposed by the Australian Industry Group and supported by Labor that would see Queensland’s LNG exporters like the Santos GNLG venture buying cheap gas on the Asian market to fill export sales contracts, freeing up local gas for the manufacturing industry.
The Australian Industry Group chief executive Innes Willox was disappointed nothing “remarkable” transpired at the meeting with the Prime Minister when industry was facing a massive crisis.
He said the government and industry leaders needed to put make the domestic market its top priority.
“Current contracts should be exempt from a national interest test, we are looking at future contracts but at the same time, we have a shortage on the east coast,” Mr Willox told Sky News,
“The export market is about 1400 petajoules, the domestic market is 700 petajoules…we need to fill that gap.
“The priority has to be to make sure that we have enough gas to fulfil the needs of the domestic market.”
He said industries would leave Australia if nothing was done.
“This is an absolute classic example of a market failure and those gas companies will not be well regarded when industry start leaving Australia and start particularly blaming energy prices,” he said.
“We’ve already heard CEOs say they can’t invest in Australia anymore, or we won’t reinvest.”
The ACCC will release regular six monthly reports to the public on the state of the gas market, including prices and shedding light on whether actions taken by all gas suppliers are effective in ensuring the supply of gas in the domestic market.
It will also scrutinise pricing, volume and availability of domestic gas compared to the gas that is being exported, and identify impediments to efficient supply, proposing measures to address any issues found.
“This monitoring will hold the gas 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,” Mr Morrison said.
The monitoring regime will run over the next three years.
The Prime Minister Malcolm Turnbull said the government “remains concerned that the east coast export LNG operators have not yet clearly articulated how Australian households and business will get adequate supply at reasonable prices.”
“The Government has asked the exporters to provide further information, in the context of possible regulatory options to address the short term market issues,” Mr Turnbull said.