‘Come to the party’: Sims targets gas companies in plan to cut sky high energy costs
Queensland’s LNG industry should be told they can only export gas to the currently lucrative international spot market if they sell sufficient gas domestically to get prices clearly below $10 a gigajoule, according to former competition boss Rod Sims.
Former Australian Competition and Consumer Commission chair Rod Sims said gas costs could be lowered (AAP Image/Lukas Coch)
Sims, the former chair of the Australian Competition and Consumer Commission, said virtually every country in the world was facing a crisis in energy costs and while other countries could not do much about it, Australia could.
The nation’s energy ministers will meet on Friday at a precarious time for the energy market as a sharp predicted increase in gas prices feeds through to producer and consumer price inflation
Sims said Australia could get its east coast gas producers to supply the domestic gas market for less than $A10 a gigajoule, which was up to a third of the current costs of between $25-30 a gigajoule.
“Australia has by far the highest domestic gas prices of any gas exporting country. No other country would tolerate its gas being exported while its domestic market is paying the same high prices as international customers,’’ he said in The Conversation.
“The gas companies need to come to the party, either to earn their “licence to operate” or to avoid the threat of export controls.
“If they know the threat of export controls is real, I believe they will do what’s necessary without the need to actually control exports.”
“They should be told they can only export gas to the currently lucrative international spot market if they sell sufficient gas domestically to get prices clearly below $10 a gigajoule.’’
Energy Minister Chris Bowen didn’t rule out the drastic move when asked about the option on Friday morning.
“I don’t think there’s any one single policy lever you could just very easily pull … obviously we have been talking to the gas companies about their obligations,” he told ABC Radio.
“We are very clear there is more to do in relation to the gas market.”
Sims said there was no sovereign risk issue involved in his proposal because the LNG contracts would be unaffected.
“Australia would simply be aligning itself with all other gas exporting nations – and, by the way, with Western Australia, which has long looked after its residents and businesses by reserving gas to ensure reasonable domestic prices,’’ he said.
“What we are talking about is the gas the three producers have available beyond their need to service these long contracts. This gas can either be exported to the spot, or short-term, market at very high prices or sold domestically.
