A new Heads of Agreement has been signed by the Prime Minister and representatives of the three east coast liquid natural gas (LNG) exporters to maintain a secure supply of gas to the east coast domestic market.

Minister for Resources and Northern Australia Matt Canavan said the agreement with APLNG, QCLNG and GLNG confirmed the industry’s commitment to meeting any shortfall of supply in the east coast domestic market.

 

“It also demonstrates the resolve of the Australian Government to support Australian businesses and focus on looking after Australian families,” Minister Canavan said.

 

“As a government, we are working hard to lower energy prices. While industry and market-led solutions are an appropriate course of action to ensure gas availability, we will always put Australian businesses and families first when it comes to gas supply – no matter what.

 

“Both the Australian Energy Market Operator and the Australian Competition and Consumer Commission (ACCC) have also found that the government’s actions to put the Australian Domestic Gas Security Mechanism (ADGSM) in place has ensured shortfalls will not occur in the east coast market for 2019 and beyond.”

Minister Canavan said real concerns existed 18 months ago around increasing gas prices and the security of gas supplies for the domestic market.

“Firm action by this government since then, including the establishment of a gas export control framework and the Heads of Agreement with LNG exporters, has helped bring domestic spot gas prices down by 25 per cent and gas offer prices by more than half,” he said.

“Getting more supply into the market firms up gas security and lowers prices for our manufacturers and households. For instance, the ACCC found that prices offered for gas supply in 2019 are in the $8 to $11 a gigajoule range. That’s in stark contrast to prices offered in the first half of 2017, when domestic gas offers were above international prices, peaking at offers as high as $22 a gigajoule in March 2017.”

Under the agreement, LNG exporters have agreed to offer uncontracted gas to the domestic market on reasonable terms in the event of a shortfall. This uncontracted gas will not be offered to the international market unless equivalent volumes of gas have first been offered to the Australian domestic gas market on competitive market terms.

More broadly, the industry has also recommitted to the Peak Electricity Demand Gas Supply Guarantee which ensures there is sufficient gas available to keep the lights on at times of high gas generation demand.

The new Heads of Agreement will be in place until 2020.