Australia threatens gas firms to avert shortage

Australia’s minister for resources said on Sunday that the government would take action to avert an energy shortage if big gas producers did not boost supply for the country’s domestic market.

Australia is on track to become the world’s largest exporter of liquefied natural gas ( LNG), yet its energy market operator has warned of a domestic gas crunch from 2019 that could trigger industry supply cuts and power outages around the country.

Major gas producers, including Exxon Mobil Corp and Royal Dutch Shell, who have large export contracts, guaranteed to ensure gas was available for the domestic market during crisis talks with the government this week.

“If the commitments are not met, if we don’t see more gas, we’ll act, we’ll take decisions in our national interest to secure our nation’s energy supplies,” Resources Minister Matt Canavan, who was at the talks, told the Australia’s broadcaster ABC on Sunday.

Australia’s power supply problems made international headlines last week when Tesla Inc boss Elon Musk offered to save South Australia, the country’s most renewable- energy dependent state, from blackouts by installing large- scale battery storage.

Manufacturers have long complained of tight gas supplies and soaring prices as producers have focused on supplying gas to LNG plants that have locked in 20- year export contracts.

Restrictions on drilling coal seam gas have added to supply constraints.

Producers blame state drilling bans, uncertainty over Australia’s climate policy and, more recently, potential increases in petroleum producer taxes, for deterring development of new gas fields.

Canavan, who did not elaborate on what action would be taken. “This is what every nation around the world would do. The gas industry understands that. That’s what we need to see delivered,” he said.