"The gas producers and exporters have acknowledged and committed to act upon the perilous reality that there is a looming shortfall in the gas market of at least 50 petajoules. That shortfall is having an impact right now, making reasonable long-term gas contracts hard to secure and sending prices well above international parity, as the ACCC has shown. There is enormous pressure on big parts of the Australian economy including manufacturing, agriculture and mining.
"This acknowledgement, and the commitment by the producers to fill the supply gap, reflects government and industry pressure on the sector after years of denial about the state of the domestic gas market and the impact of their export first strategy.
"We welcome the Government's assurance that it will hold the gas producers to their word and guarantee that they fill the void in the domestic market for 2018 and 2019. Transparency is essential, and regular reporting to the ACCC on pricing, sales and offers is positive. Australian industry, the community and the Government have been given a commitment. We should trust – but verify.
"The Australian Domestic Gas Security Mechanism remains an important tool to compel cooperation by gas exporters. The Government must not hesitate to invoke its powers at the first sign of non-compliance or fudging.
"The bottom line is that the current situation cannot go on. Gas users in industry and the electricity sector need long-term certainty about gas supply and pricing. Without it investment will disappear, with dire consequences for jobs and energy security. Confidence in our political system to deliver what is good for the economy is also at stake.
"Today's commitments should be the start of a multi-pronged strategy between gas suppliers, users and government to ensure that we have adequate access to gas at no more than international prices. New sources of supply and demand efficiency both have a part to play. As the ACCC has indicated, current prices are far above a reasonable netback-plus-transport benchmark. The task now is to ensure we resolve the immediate crisis and provide long-term certainty for Australia's energy users," Mr Willox said.
Media enquiries: Tony Melville – 0419 190 347