A new report has found Australia lags behind other OECD countries in maximising value from natural gas resources.
The 200 page Australia Domestic Gas Policy Report by Queensland-based Innovative Energy Consulting found international experience shows gas exports and a vibrant domestic market should not be mutually exclusive.
However this required strategic vision. Gas rich countries like the United States, Canada, Russia, Norway and the Netherlands relied on policies to protect the national interest and maximise value from gas resources.
Simply relying on market forces – as Australia does – is not international practice.
DomGas Alliance Executive Director, Gavin Goh, said the Report explodes many of the myths in the domestic gas debate.
“LNG represents less than 10% of world gas production and only 30% of international gas trade.”
“Australia has abundant gas resources so there is no reason why prices in energy-poor Japan should dictate prices in Australia.”
“Neither the US nor Canada consider it smart policy to link domestic energy prices to the world’s highest prices in Japan.”
The Report found affordable gas is a major competitive advantage for countries – as an energy source for industry, the cleanest fossil fuel and as a feedstock for value-adding industries.
The Report however warned that the convergence of domestic gas prices to export parity or LNG netback first in WA, and now in the East Coast, will have serious consequences for Australia:
• Higher gas prices will impact industries like fertiliser, chemicals, glass, paper and steel, as well as the farms and businesses that use those products.
• Companies in Australia will be forced to close and relocate facilities to other countries where gas costs are lower.
• A switch from carbon-intensive coal to clean natural gas will not occur, even with a carbon tax.
“The Report points out that while it might take a decade to build an LNG project, it takes many decades to build a manufacturing sector,” Mr Goh said.
“The experience in WA and overseas is clear. Government must protect the national interest and prioritise Australian industry and households.”