Turnbull to grill energy producers as shortage tipped
THE spotlight on Australia’s domestic gas supply issues will further intensify next week, with major energy producers set to face Prime Minister Malcolm Turnbull.
A day after he warned that the country was facing an “energy crisis”, Mr Turnbull yesterday put gas companies “on notice” to explain how they are going to secure future supplies.
He has summoned the oil and gas producers to a roundtable meeting to discuss the eastern state gas shortages that have provoked strong concerns from businesses over spiralling energy prices.
Top executives from ExxonMobil, Shell, Santos, Origin Energy and the three export-focused liquefied natural gas projects in Queensland are expected to attend.
Mr Turnbull’s warning came after a report by the Australian Energy Market Operator (AEMO) flagged domestic gas and electricity shortages within the next few years.
Australia is set to overtake Qatar as the world’s largest LNG exporter in 2018.
LNG exports jumped 49 per cent in 2016 to 45.2 million tonnes, and hit a monthly record in January 2017 as Queensland plants ramped up production.
However, the focus on overseas customers has resulted in significant gas production being diverted to the LNG plants, resulting in local shortages that drive up domestic prices.
At the same time, governments in NSW, Victoria and the Northern Territory have banned fresh oil and gas exploration after pressure from farming communities and green groups.
AEMO has estimated a shortfall in domestic gas-powered electricity generation as early as the summer of 2018-19.
Earlier this week, a report by energy consultancy EnergyQuest warned of further supply risk with the Queensland gas export projects likely to have insufficient reserves to deliver on contracts.
“While there is some investment under way in new east coast gas supply, it is nowhere near sufficient and this reinforces the growing concern about gas supply security on the east coast,” EnergyQuest chief executive Dr. Graeme Bethune said.
Australia’s east coast is facing a potential gas shortfall of 205 petajoules of gas by 2025 as output eases in the Gippsland, Otway and Nass basins, the report says.
The Federal Government has urged state governments to remove barriers to gas exploration, but Mr Turnbull yesterday did not rule out measures such as reserving a certain percentage of gas for domestic use.
In January the Queensland Government released land for gas exploration that could only be used for future domestic use – a decision that has been lauded by Federal Energy Minister Josh Frydenberg.