Affordable fuel, no shortages: Bowen’s domestic reservation threat for gas industry

Most of Queensland’s gas has been locked into long-term export deals since the industry built three massive hubs in Gladstone and began exports in 2015. This created a huge industry generating billions in royalties, but also linked the east coast market to international prices and competition.

Two of the state’s three LNG producers are also key domestic suppliers, accounting for 40 per cent of the east coast demand. But a key problem has been the failure of gas giant Santos’ Queensland fields to live up to expectations, spurring the company to fill their long-term supply deals by buying supply from other producers that would otherwise have been available to the domestic market.

Consumer advocates and companies that need the fuel to make products such as steel, cement, bricks, fertilisers and food, have been demanding that the government impose export restrictions on the Queensland producers to boost domestic supply and lower prices.

Bowen said the terms of reference of his review, which he will oversee with Resources Minister Madeleine King, put the gas industry on notice.

The gas lobby group Australian Energy Producers drew the ire of the Albanese government when it did not campaign against Dutton’s unprecedented plan but continued to campaign against “green tape” regulations of the Albanese government.

Industry sources not willing to speak publicly said they believe Bowen and King may believe there is little political benefit in keeping the gas industry on side.

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King told an industry conference last month that Australians were tired of seeing their “vast” gas resources exported overseas and that it was “unfair” for this to happen while prices continued to rise.

“The Australian gas industry should pay careful attention to public concern of rising gas prices and supply gaps,” King said.

Bowen and King’s Commonwealth Gas Market Review will combine three ongoing federal reports into existing measures that were put in place to divert Queensland gas exports to the domestic supply, with varying levels of success.

Western Australia has since 2006 required gas producers to reserve 15 per cent of their production for the domestic market. It is the only state with a reservation plan.

The opposition said in a statement that the government must “immediately release new gas acreages for exploration, and fast-track approvals of gas projects”.

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