Plastics and chemicals peak group PACIA argues for gas market reform

The Plastics and Chemicals Industry Association’s national conference has heard the managing director of BASF Australia & New Zealand claim that Australia’s gas market has failed manufacturers.

Ross Pilling, the managing director and chairman of BASF and a member of PACIA’s board, has demanded policy action on natural gas, an essential feedstock for the $40 billion-a-year Australian chemical and plastics sector.

“PACIA members are finding it extremely difficult to secure long-term supplies to underpin their existing investments; many are unable to negotiate contracts for supply beyond 2016,” Pilling told the conference, which is in its third and final day, at Melbourne’s Langham Hotel.

Pilling cited a report commissioned by PACIA and released in October last year, suggesting that for every dollar gained through exporting LNG, $21 in value-add was lost.

The unintended consequences of Australia’s LNG boom and the current high domestic energy prices are a controversial topic, with high-profile manufacturing executives including Andrew Liveris from Dow Chemical and Sue Morphet from Manufacturing Australia claiming that policy action is needed.

Though a gas reservation policy – suggested by Australian Workers Union national secretary Paul Howes, who will address the PACIA conference this afternoon – similar to Western Australia’s has been proposed by some as a solution to the issue, Pilling suggested that this should not be explored. Instead, measures to boost production and increase transparency.

 “Australia is in the middle of a gas boom and LNG has become a major export. This is great for our nation; as an industry, we have no issue with the export of natural gas,” Pilling said.

“We have vast reserves of natural gas and there is more than enough to both support a vibrant and sustainable chemicals and plastics industry and meet export demand.”

PACIA’s national conference is themed Adding value: the next decade for chemicals and plastics in Australia, and launches the group’s Strategic Industry Roadmap for its members’ sustainable growth.

To view the roadmap, click here.