PERTH – Australian gas producers have warned that the federal government’s cap on gas prices would undermine the incentive to explore and development gas opportunities in the country, echoing concerns raised by the Australian Petroleum Production and Exploration Association .
“These are the primary factors that are driving higher energy prices in the east coast gas market, rather than solely the impact of the tragic war in Ukraine. We need to unlock gas supply now. For example, Woodside has been looking at options to increase supply, including through new liquefied natural gas import terminals, exploration spending and further development on the east coast.
“How can the government expect to impose a regulated price on gas exploration and development where significant upfront capital investment, exploration success risk and the multi-decade nature of projects are par for the course? “Instead, the answer to this crisis is right under everyone’s noses; work with us to increase gas supply which will bring downward pressure to energy prices.”
“To maintain reliable supply and mitigate against gas and electricity supply interruptions and/or much higher prices because of a dependence on imported LNG, the government must focus on supporting domestic gas suppliers, such as Cooper Energy, to develop new competitively priced gas supply. This is the logical path to reducing the supply deficit and managing gas prices,” Maxwell said.
The cap will apply to new wholesale contracts with east coast gas producers for 12 months from December 2022, with a review by mid-2023. Gas from undeveloped fields and gas sold through the short term trading markets and the Victorian declared wholesale gas market will be exempted from the cap, minimising the impact on supply incentives and short term price signals in these important balancing markets.