Gas producers warn to prove they have domestic supply for next year, or face 'gas trigger' restrictions

The Minister of Resources has informed gas producers that the federal government intends to withdraw “gas triggers” to limit their exports, unless they can prove that the country is not facing a gas shortage by 2023.

Key points:

• The federal government has warned it will withdraw the “gas trigger” if supplies for next year are not guaranteed
• Gas industry says Australia is not facing a gas shortage, contrary to warnings
• Government will work to reform gas triggers and renew them by 2030

Madeleine King said she would issue a notification to suppliers, the first step towards enforcement of the Domestic Gas Supply Mechanism, directing them to provide a detailed response on supply and export forecasts for next year.

Consumer watchdogs have warned that despite Australia’s abundant gas supplies, the outlook for next year is “very concerning”, with most of that supply slated for export.

It warns the government to consider intervention or risk a gas shortage by 2023.

The federal government has the power to force gas producers to limit their oversupply exports to ensure supply for the domestic market, known as “gas triggers”.

The trigger will expire next year, but Ms King says it will be updated to 2030 and reformed so that it can be used for a shorter period of time.

The minister said he would make a decision in October whether to proceed with imposing export controls.

If withdrawn, the gas trigger will take effect from January next year.

Industry promises no gas shortage next year

The gas industry is trying to ward off the government’s threat of pulling the gas trigger, saying it has supplies to meet consumer demand next year.

The ACCC has projected a shortfall of about 10 percent of national gas demand next year as producers draw more domestic supply for exports, where it can sell at better prices.

But industry believes three times as much uncontracted gas is available for supply to the domestic market than the projected shortfall, and producers understand their “obligations” to Australian households.

In a statement, the head of the industry’s top body, the Australian Petroleum Production and Exploration Association (APPEA), said there was no gas shortage and no shortage coming.

“There has never been a true shortage and there won’t be another next year – this is a signal to the ACCC that action is needed, and the industry will act,” said APPEA chief executive Damian Dwyer.

“Gas customers can be reassured that supply will be sufficient next year so households and businesses can continue to run uninterrupted.”

The ACCC said while exporters had been “technically compliant”, some exporters were unwilling to negotiate with the domestic market and honored handshake agreements to engage in fair price negotiations to ensure domestic supply.

Ms King said the government would review the agreement with exporters, which expires next year.

Mr Dwyer said the pressure on the system was due to the war in Ukraine, coal-fired power outages and “renewables are not increasing when needed due to bad weather”, and not the gas industry.

He said prices for 2023 had increased, but Australian prices remained below international prices.

“Industry stood up when the east coast needed us this winter and we are going to do it again now as we have done for decades, providing a safe and reliable energy supply,” he said.

The Australian Energy Market operator was forced to intervene in the east coast market earlier this winter to limit prices and force electric generators to generate power.

AEMO at the time said the industry was “incapable of dealing” with the problems it was facing and required regulators to take control to prevent power outages in some states.

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