The Government is aiming to improve the security of Australia’s east coast gas market with a new gas development program and funding outlined in the 2017 Budget. The Government has committed $28.7 million over four years to accelerate the development of gas resources, aimed at ensuring affordable and reliable energy for Australian users.

The new East Coast Gas Development Program will target faster development of onshore gas fields to meet Australian demand, while also focussing on a fair return to landholders.

Minister for Resources and Northern Australia Senator Matt Canavan said the program “will help secure the domestic gas market against possible supply shortfalls in coming years, and enable large gas intensive consumers to secure supplies on more acceptable commercial terms.”

APPEA Chief Executive Dr Malcolm Roberts welcomed the new gas initiatives.

“While the industry has tripled gas production on the east coast in the last five years, there is a pressing need for more investment to expand supply. The east coast market will require up to $50 billion in investment in the next 15 years to meet demand.

“The Commonwealth’s new $28.7 million East Coast Gas Development Program will help pull forward new gas supply projects. A similar program by the South Australian government has accelerated the development of five projects supplying the local market, with a second round of projects to be announced later this year.

“APPEA welcomes this initiative. The only genuine, lasting solution to the tight east coast gas market is more supply. More supply will boost liquidity and competition in the market, putting downward pressure on prices. We have ample resources in Australia to supply domestic and export markets – we should be using those resources,” Dr Roberts said.

Also outlined in the Budget is a $5.2 million national interest and cost-benefit analysis study into the construction of gas pipelines from the Northern Territory and Western Australia to the east coast, through Moomba in South Australia, to lay out the groundwork for infrastructure development that will deliver more secure and reliable power into the medium term.

Aimed to bring down the cost of gas for Australian families and businesses, the Government has already committed to the substantial gas market reforms. To deliver these reforms sooner, the Government will provide $19.6 million over four years to the Gas Market Reform Group to better facilitate gas trading, encourage greater competition to place downwards pressure on prices and ensure gas markets are more transparent and accountable.

APPEA also welcomed the Gas Market Reform Group funding saying, “progressing these reforms and improving market transparency is vital. APPEA supports monitoring of the market across the industry value chain. We are keen to see the release of the first ACCC report later this year.”

The Australian Pipelines and Gas Association also commented on the 2017 Federal Budget announcements.

APGA Chief Executive Peter Greenwood said the Budget set out measure totalling $86.3 million over four years from 2017–18 to increase gas production and support affordable electricity prices for households and industry.

“These measures recognise the critical need to bring additional supplies of gas to Australia’s markets,” Mr Greenwood said.

“Measures amounting to almost $60 million are directly focussed on increasing gas supply, with $30 million for additional scientific assessments of unconventional gas projects and $29 million to encourage responsible development of onshore gas for the domestic market.

“These are both timely measures that demonstrate the Federal Government’s commitment to unlocking Australia’s gas reserves.

“It is now incumbent on the States and Territories to cooperate with the Federal Government to enable access to reserves to ensure secure energy supplies for all Australians.”

The 2017 Budget also includes specific measures to investigate two potential gas pipelines to South Australia; one from the Northern Territory and one from Western Australia.

“The interest in gas pipelines reflects the vital role in Australia’s energy markets that gas pipelines play,” Mr Greenwood said.

“However, it is important to remember that new pipelines will do little to address energy security if there is no new production to provide more gas into the system.

“The Federal Government should also be mindful that some of the gas market reforms under way, such as the arbitration framework and the day-ahead capacity auction will change the investment environment for gas pipelines.

“It’s important that the right balance is achieved between ensuring fair access to pipelines and maintaining investment signals to allow pipelines to be built and expanded as new gas supply is developed,” Mr Greenwood said.

The Government has also committed $2.0 million to the Australian Energy Market Operator to improve publication of real time assessment of gas flows and market analysis, to make it easier for the market operator, businesses and investors to make informed decisions about gas market operations.

The Government is committing $13.4 million to support an Energy Use Data Model, world class data linking, analysis and modelling being undertaken by the CSIRO, to improve energy market forecasting that will facilitate better energy management and infrastructure planning.

The Budget also outlines $6.6 million over three years from 2017-18 to the Australian Competition and Consumer Commission (ACCC) to establish a monitoring regime for the gas market by using its inquiry powers to compel the gas industry to provide greater transparency of transactions in the gas market, including factors affecting supply and pricing. 

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