"Steps foreshadowed for the Federal Budget to deepen the gas market and improve its transparency will be helpful, though fundamentals remain worrying for gas users," Innes Willox, Chief Executive of national employer association Ai Group, said today.
"With modest investment and careful implementation it may be possible to greatly improve the Wallumbilla Gas Hub, to the point where it is more of a local equivalent to the United States’ Henry Hub – a liquid market that provides a clearer basis for price discovery.
"Other measures to encourage new investment also promise incremental improvements in the supply-demand balance.
"The challenges facing gas users remain severe, however, despite these positive measures. The current market fundamentals – geology, geography, and the relative size of the export channel versus the domestic market – suggest that without dramatic change, expected high long-term gas prices will be a drag on many manufacturers and fatal for some. At the same time, the commercial, community and policy push for net zero emissions requires practical pathways for most of today’s gas users to transition over time to biogas, hydrogen, electrification and other options.
"The price risks and the emissions imperative imply the Government should bolster its gas strategy with substantial support for gas efficiency and transition pathways. Next week’s Budget is a golden opportunity to fill that gap in the current suite," Mr Willox said.
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