SYDNEY – Australian Prime Minister Malcolm Turnbull announced on Thursday a plan to limit gas exports to guarantee supply to the domestic market and avoid shortage and price hike.
The plan involves the creation of the Australian Domestic Gas Security Mechanism, which will give the government the power to impose export controls on companies when there is a shortage of gas supply in the domestic market.
“It is unacceptable for Australia to become the world’s largest exporter of liquefied natural gas, but not have enough domestic supply for Australian households and businesses,” said Turnbull at a press conference.
The plan, which will be out for consultation in the gas sector before coming into force on July 1, will apply only to exports from the east coast – Australia’s most populated region – and will comply with the country’s international obligations.
“The long term goal remains boosting the supply of gas by removing state restrictions on exploration and development,” added Turnbull saying that around 65,000 jobs depend on secure, reliable and affordable gas.
The plan was approved after two meetings between the government and gas companies – operating with a state license – which were asked to be net contributors to the local markets.
The restrictions will be established on the basis of information provided by energy market regulators and operators with respect to the projected domestic needs and the eventual gas scarcity crisis.
According to the plan, the companies which export more internationally than supply to the local market will have to present a plan for compensating during situations of domestic scarcity as part of their production and export plan.
The exporters that do not supply more gas outside than to the local market will get licenses to sell outside according to their estimates.
Australia exports two-thirds of its gas and has restricted new gas explorations in certain states.
In Australia, energy crisis has led to wholesale gas prices to reach AU$ 20 ($15) per gigajoule, almost two times more than the export price, said Turnbull.
The Australian Energy Market Operator recently warned about a gas scarcity during summer 2018-2019 in the states of New South Wales, Victoria and South Australia.