NATION Deal on gas but price in doubt

THE nation’s competition watchdog has put gas companies on notice they will be closely monitored to prevent price gouging after the Turnbull Government yesterday signed an official deal with major firms to avert a looming energy crisis.

Australian Competition and Consumer Commission boss Rod Sims said the deal, signed yesterday after a week of negotiations, was “extremely welcome because it would make a contribution to addressing what is a pretty dreadful problem out there”.

“The ACCC will have a big role monitoring how all this goes and we’ll be looking to see if companies that want gas get multiple offers of gas and that it is a reasonable price,” Mr Sims said.

“That reasonable price is based on what the effective international price is and making sure retail margins are appropriate and pipeline costs are appropriate.”

Prime Minister Malcolm Turnbull yesterday led the meeting between his senior colleagues and the chief executives of three major gas exporters, in which the companies signed a deal to guarantee up to 108 petajoules, or about $ 925 million worth of gas, to Victoria, Queensland and NSW in the next year.

The companies will also have to report more information about their transactions to the ACCC after concerns they were not selling to local manufacturers, causing prices to spike and jobs to be left hanging.

The meeting, which was scheduled to run for 90 minutes, concluded in an hour instead with the signing of the agreement, something which was not anticipated by some of the participants a day ago.

Speaking at the signing with Treasurer Scott Morrison, Energy Minister Josh Frydenberg and Deputy Prime Minister Barnaby Joyce, Mr Turnbull said the deal was “vitally important to ( ensuring) Australian jobs and to ensuring Australians have affordable and reliable energy”.

But Shell Australia boss Zoe Yujnovich admitted there had been “some difficult and tense moments”.

Australian Industry group chief executive Innes Willox, who represents manufacturers and other businesses, said the agreement “should help avoid the looming supply crunch we’ve feared – for now”.

“However, there are two big questions from here: will we make the most of this opportunity to secure the market for the longer- term, including by reforming state gas moratoria, and will prices fall to export parity quickly,” he said.