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Minister puts LNG companies on blast

Thursday, November 3rd, 2022

Image shows LNG shipping vessel

Federal Minister for Industry and Science Ed Husic has lashed out at the oil and gas sector, saying the industry was not taking supply concerns and rising energy prices seriously.

Speaking to the ABC RN Breakfast show earlier this week, Husic noted that while a heads of agreement (HoA) was signed with liquefied natural gas (LNG) producers earlier this year to prevent a gas supply shortfall and secure competitively priced gas for the domestic market, subsequent evidence has shown a continued increase in energy prices.

“I’m already picking up evidence that the contract offers post the HoA that we’ve signed are just as high if not higher than what was the case before the HoA,” Husic said during the interview.

“There is evidence that in some contracts that what’s being offered was higher than what was received pre HoA. And that says to me, and it’s typical – I think this is reflective of this fact, that the market the way it stands at the moment that the LNG exporters and their associates, as the Australian Consumer and Competition Commission (ACCC) has identified, they’ve got influence of close to 90% of the proven and probable reserves in this country.

“So, their view is they can keep doing what they’ve been doing even though the country, everyone, has been saying to them, “You’ve got to see sense. You’ve got to do better. There are implications and consequences of what you’re doing,” and they’re still not doing it,” Husic said.

The HoA put in place in September this year, and signed by three east coast LNG projects, was aimed at ensuring additional gas supply, improving security and affordability of domestic gas supplies in future years, while also introducing transparency measures to improve the information available to customers.

The HoA included LNG exporters first offering uncontracted gas to the domestic market, on competitive terms, before exporting, and that domestic gas customers would not pay more for the gas than international customers. The HoA also committed LNG exporters to offering gas on terms consistent with a code of conduct, and enhancing transparency and accountability, with quarterly compliance reporting to the Minister of Resources with oversight by the ACCC.

Husic said this week that the behaviour from the gas companies meant that the government had now reached a point where it was “forced” to consider a wide range of interventions to get a “better deal” because the LNG companies were “not doing the right thing”.

“And it’s been, as indicated by the ACCC – again, I come back to the stuff that they put out in the last few weeks – cases where the LNG exporters are offering gas to the domestic market at prices they couldn’t reasonably expect on the international market,” he added.

“And now we’ve got to go the next step in terms of further consideration about what we do to drive down input costs,” Husic said.

The Minister was unwilling to comment on what form the “next step” would be, saying the government would have to work through that “internally”.

The Australian Petroleum Production & Exploration Association, which previously welcomed the HoA, was unable to comment at the time of writing on Thursday.

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