Gas supplies cut into Illawarra manufacturing: NSW Business Chamber

A new report by Energy Quest, prepared on behalf of the NSW Business Chamber, highlights that the Illawarra will face gas shortages if supplies are not increased.

Titled “Running on Empty”, the report investigates forecasts from the Australian Energy Market Operator, and how they will apply to regions such as the Illawarra.

“Illawarra gas users have already seen prices triple over recent years. Poor planning and a lack of action to develop significant gas resources in this state have resulted in our members suffering the most expensive gas in mainland Australia and the least certainty with respect to gas supply security,” said executive director of the Illawarra Business Chamber, Adam Zarth.

Led by the Port Kembla steelworks, manufacturing is a significant industry in the Illawarra region, employing 5,079 people in the Wollongong City Council area, 5.8 per cent of the local workforce. However, the sector has been affected by higher gas prices than the rest of the state.

“Continued upward pressure on energy prices, and natural gas in particular, exposes a number of manufacturing businesses in the Illawarra,” said Zarth.

Zarth identified that local industrial companies are put at risk due to high energy prices.

“For instance Bisalloy Steel incurs around $2 million per annum in energy costs and identifies this as its major high level business risk with the greatest potential to materially impact its financial outlook.

“At the rate of current consumption, Bisalloy could be faced with a cost premium of $148,500 when compared to an equivalent business in Queensland by 2025 if a more efficient gas supply into NSW is not approved in the short-term,” he said.

The report recommends the approval of a LNG import terminal at Port Kembla, as well as upgrades to gas pipelines across the state. In addition, the report recommends the approval of the Narrabri Gas Project, which proposes to extract gas from coal seams in regional NSW.

“Inaction on gas and energy security is now holding the future of businesses in the Illawarra to ransom, threatening employment losses and reduced investment. Now is not the time for further reviews but a time for action to ensure NSW has energy security to power our homes, our businesses and our future,” said Zarth.