A deal has been struck between Prime Minister Malcolm Turnbull and representatives of the gas industry following a warning of shortages along the east coast.
Shell, GLNG Operations and Australia Pacific LNG have all agreed to secure more supply over the next two years amid a looming energy crisis.
The move follows a report released last week by the Australian Competition and Consumer Commission (ACCC) which predicted a gas shortfall of 54 petajoules in 2018 and 48 petajoules in 2019.
“We hope that through the Heads of Agreement, indeed we can find a path forward to make sure that the domestic market is serviced and that indeed there is enough available gas for the market, which we stand behind and are committed to deliver,” Turnbull reportedly said.
Australia Pacific LNG CEO Warwick King said it is “absolutely vital” Australia adopts a whole of market solution to resolve new gas supply.
Meanwhile, the Australian Industry Group (AiG) welcomed the government’s recognition of the “intense energy cost burdens facing industry” but has warned that it is important it makes the most of the opportunity to secure the market in the long-term.
“[This] gas agreement delivers breathing space to pursue medium-term plans to moderate demand and bring on new conventional, unconventional and import supply options as existing resources deplete,” said AiG CEO Innes Willox
“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? Contract prices offered to gas users appear to have fallen from the highs of early 2017, but remain well above historic levels. Energy users will be looking for further falls as more uncontracted gas is offered locally.”