The $12 a gigajoule price cap was introduced by the Federal Government to bring down the cost of energy as expectations rose of massive increases in household bills.

The policy was described as “Soviet style” by Santos and has caused outrage among other gas producers. Shell put a hold on a major gas tender aimed for the market in 2023-24 until it could assess the impacts.

The price increase was on the back of a surge in global energy prices that have also affected coal. The surge was largely a response to the embargoes against Russian energy exports following its invasion of Ukraine.

State Gas, a junior company in the sector, said in a statement to the ASX signed off by Cottee that its recently announced CNG project in Queensland would remain economically attractive despite the price cap.

“In particular, the company’s CNG production is currently planned to be sold into the spot market which is not governed by the announced price cap and, moreover, project economics are estimated to be less than $12 a gigajoule,” Cottee said.

“Notwithstanding these project-specific positive commercial drivers, State Gas stands with other resource industry participants and commercial leaders in Australia in challenging both the intent and approach of the regulatory intervention in the gas industry.

“This intervention allows the Government to dictate the contracted price of gas for the next 12 months and significantly influence it thereafter.”

State Gas said this would have a significant impact on investor sentiment and that a price cap would not affect the drivers of the current crisis, which was a gas shortage.

“State Gas will continue to lobby against this regulatory intervention as part of the wider industry response and will keep its shareholders updated on the impact of the regulatory interventions a detail becomes clearer over the quarter.”