High cost of energy
Santos boss blames policies of feds, states
TOP energy industry executives have blamed poor policy by state and federal governments for driving domestic electricity and gas prices higher.
In particular, they have slammed the Federal Government’s decision to curb gas exports to ensure adequate domestic supply and bring prices down.
Speaking at a Committee for the Economic Development of Australia (CEDA) event, Santos chief executive Kevin Gallagher urged the Federal Government to come up with proper policy for the energy sector.
“We have been asked to believe that the high domestic prices are the fault of the LNG exports,” he said. “At the same time, states and territory governments have either banned or restricted gas exploration and production.
“Government interference in these arrangements is reactive politics and squarely raises the issue of sovereign risk.” The Australian Domestic Gas Security mechanism will give the Federal Government the power to impose export controls on companies when there is a shortfall of gas supply in the domestic market.
Santos has been accused of contributing to the tight gas supply situation, given its reliance on third-party supplies to fill up export shipments at its giant Gladstone LNG project in Queensland.
Domestic gas reservation is a legitimate policy objective to secure supply for domestic use in times of shortage, Mr Gallagher said, but he urged the Government not to apply this retrospectively to already committed long term offtake agreements.
A better alternative would be to restrict the export of uncontracted gas available to be sold in the energy spot markets, he suggested, which is likely to cover rivals Origin Energy’s Australia Pacific LNG project and Shell’s Queensland Curtis LNG projects in Queensland.