The Australian Competition and Consumer Commission has called for major reforms of the gas market to increase the diversity of supply and break the dominance of major companies.
That included not granting gas acreage to producers who already had “substantial existing acreage” unless governments were satisfied it would not affect the timing of developments.
It called for greater oversight of the development of gas and said governments should follow Queensland’s lead and consider both the diversity of suppliers and efficiency in which gas is brought to the market.
In a speech to a gas industry conference, ACCC commissioner Anna Brakey said this year the LNG companies would withdraw more gas from the east coast market than they would supply.
She said the amount the three projects delivered to the domestic market had fallen by about 50 per cent since 2017-18. About 20 per cent of the expected gas field reserves had also been written down since 2017.
Brakey said the rapid and significant reduction in domestic supply was at odds with what the Government was told before the LNG projects were developed when they said there was sufficient supply and that domestic gas prices would not rise.
“But it hasn’t turned out that way,” Brakey said.
By 2026 or 2027 the east coast market was expected to be short of gas, she said.
Brakey said it was “absolutely vital” that the LNG producers met the conditions of a heads of agreement it signed with the Federal Government that determined domestic supply arrangements. That agreement expires later this year and the ACCC wants it extended.
She said the ACCC was concerned about compliance with the agreement and that gas wasn’t able to be supplied to domestic customers.
It cited the example of an expression of interest for gas being issued less than a month before the gas was offered overseas.
“We’d like t0 see competitive offers made to the domestic market in terms that meet the needs of domestic buyers,” she said.
“In addition, we’d like to see more offers actually resulting in domestic supply which we consider would be a clear indicator of whether the offers were made on competitive terms.”
She said the CCC thought government could reduce barriers that producers faced by considering third-party access for upstream infrastructure and storage, including gathering pipelines, water treatment and compression facilities.
“We continue to see monopoly pricing in many pipelines and shippers have expressed concerns to us about high transport prices, limited-service flexibility and bargaining power and unused pipeline capacity,” Brakey said.
She said governments and the industry must do more to ensure there was enough domestic gas.
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