Australian states press for gas exporters to boost local supply

·2 min read

By Sonali Paul

MELBOURNE, Aug 12 (Reuters) - Australian state energy ministers said on Friday local gas production should be prioritised for the domestic market to ensure there is no shortfall, as forecast for 2023 and 2024, raising pressure on exporters to boost local supply.

Comments from the ministers from the two most populous states, New South Wales and Victoria, came as Resources Minister Madeleine King considers whether to curb exports from three east coast liquefied natural gas (LNG) export plants, run by Shell Plc, ConocoPhillips and Santos Ltd.

Ministers held a second round of talks on Friday with national energy minister Chris Bowen on gas supply and energy market reforms following a power and gas crisis in June.

"It's fair to say the challenges remain. Challenges remain this year, they remain next year, into the immediate future," Bowen told reporters after the meeting.

The ministers agreed to extend powers to the Australian Energy Market Operator to line up gas reserves in underused storage facilities ahead of winter 2023 and require it to come up with an annual winter readiness plan each year for the east coast to identify risks well ahead of time.

"We produce more than sufficient gas to meet our needs, but the problem is too much of it has been allowed to be exported at our own cost, and that's got to change," Victoria state energy minister Lily D'Ambrosio said at a televised media conference.

New South Wales energy minister Matt Kean said the gas shortfall forecast for 2023 and 2024 needed to be met.

"And what we need to do is prioritise Australian gas for Australian gas users ahead of companies making super profits and exporting that gas offshore," Kean told reporters.

There was no mention in the ministers' communique about a proposal from billionaire Andrew Forrest's company Squadron Energy for an entity to be set up to line up imported LNG as back-up for winter 2023 through a terminal being built by Squadron.

However Squadron Chief Executive Officer Eva Hanly said in a statement the company was "very encouraged by today's landmark policy decision, in particular the power granted to the Australian Energy Market Operator to procure and store gas in the market."

The ministers also agreed to require regulators to take into account emissions reductions when making decisions on the energy market, in the first change to the National Energy Objectives in 15 years.

Bowen said the change would make clear to global investors that Australia is serious about cutting emissions after more than a decade of policy uncertainty.

($1 = 1.4055 Australian dollars) (Reporting by Sonali Paul Editing by Mark Potter)