Australia to restrict gas exports as energy crisis bites

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SYDNEY: Australia will enforce export restrictions on major gas producers, the prime minister said Thursday, to shore up domestic supply as a growing energy crisis sees power prices rise and blackouts more common.

The country is expected to surpass Qatar as the world’s largest liquid natural gas producer by 2020—with Japan, China and South Korea key buyers. But booming export demands have left it short of local supplies.

Prime Minister Malcolm Turnbull said exporters were dipping into domestic reserves to fulfil foreign contracts and intervention was needed to curtail “dramatically higher prices” paid in Australia.

“It is ridiculous for us to be on the edge of becoming the largest LNG exporter in the world and not have to have enough gas for our businesses, for our households, for industries, great industries like this here in Australia,” he said at a manufacturing plant in Queensland.


The move—which from July 1 will allow the government to put export controls on producers to ensure they put more into the domestic market than they take out—was a “temporary measure” until Australia could unlock more reserves, he added.

Turnbull accused state governments, who in some instances have banned gas production on environmental grounds, of “putting the energy sector and manufacturing at risk”.

“We should be able to export plenty of gas and have plenty of gas available for our domestic market. We should be able to do both and we need to get more production.”

Major Australian gas producer Santos said it would collaborate with the government.

“As an Australian company, Santos has been a long term supplier of natural gas at affordable rates in support of the domestic market on the Australian Securities Exchange,” it said in a statement.

“Moving forward Santos will supply more gas into the Australian domestic market than it purchases for its share of LNG exports.”

Despite being one of the world’s biggest coal and gas producers, political debate over energy supply has raged since South Australia suffered a statewide blackout in September and record-high temperatures in recent months put pressure on the national energy grid.

The Australian Competition and Consumer Commission announced last week an industry-wide investigation into Australia’s gas market, fearing that soaring prices would put Australian firms out of business.

“The inquiry will examine how gas suppliers will make more gas available to Australian industry and other domestic gas users, and the effect this has on overall market dynamics,” ACCC chairman Rod Sims said.

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