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Ai Group calls on Federal Government to proceed towards invoking Gas supply mechanism to address extreme domestic supply concerns

"Industry remains deeply worried about the state of the gas market. We have today released a submission which calls on the Federal Government to maintain pressure on gas exporters by proceeding towards invoking the Australian Domestic Gas Security Mechanism (ADGSM) export controls," Australian Industry Group Chief Executive, Innes Willox, said today.

"Ai Group member businesses continue to experience extreme contract prices and poor contract availability; the market remains non-transparent; and while there have been some recent positive signs of action by gas exporters, it is far too early to know how effective these will be in rebalancing the market.

"In our submission, we argue that the Government should determine that 2018 is a shortfall year under Regulation 13GE of the Customs (Prohibited Exports) Regulations 1958.

"There is considerable leeway under the Regulations to amend such a decision subsequently if circumstances warrant the tightening, loosening or removal of export controls. However, there would be no power to impose export controls on LNG in 2018 unless the Government made a shortfall determination by 1 November 2017. The asymmetry of these options further bolsters the case for making a shortfall determination in order to maintain the Government’s freedom to respond to developments in the gas market.

"Despite some recent improvement, our industrial members have become alarmed by the extraordinary rise in the price, and reduction in the availability, of contractable gas. The hope would be that the market will improve even further and obviate the need for the government to move beyond the first step of a shortfall year declaration but it needs to keep its options open,” Mr Willox said.

Ai Group's ADGSM submission is available here

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