Ai Group welcomed the chance to make a submission on the Securing Australia’s Domestic Gas Supply issues paper.

We were broadly supportive of the Australian Domestic Gas Security Mechanism (ADGSM) as enacted by the former Government. While it looked quite complex and would have been slow to use, we thought that it would be effective in responding to the problems of the time. 

However, today’s circumstances are quite different. The Russian invasion of Ukraine; Europe’s decision to move as fast as possible to end its reliance on Russian energy, most importantly natural gas; and Russia’s moves to pressure Europe into accepting Ukraine’s subjugation by cutting off gas supply before Europe is ready; these factors mean a tight global gas market and high global gas prices, both today and for years to come.

The ADGSM’s status as an important last resort makes it worrying that the existing mechanism is so slow and cumbersome, and any impacts so unevenly spread among gas exporters, that it is very hard to use effectively. In addition the current ADGSM design does not directly address affordability of gas supply, especially when unaffordability may be driven by international pressures rather than domestic supply.

Ai Group therefore welcomes the timely review by the Australian Government of the ADGSM’s design.