Australia officially the laughing stock of world's gas market
Following news that the NSW Government has given approval for a Japanese backed consortium to build an LNG import terminal in Port Kembla, Centre Alliance Senator Rex Patrick has declared the Coalition’s energy policy a complete and utter failure.
"We are the world’s largest exporter of LNG and yet we are building a $250M import terminal. Indeed, there are four more import terminal proposals under development. This is an unbelievable situation," Rex said.
"It costs about $4.70 to liquefy and then ship a GJ of gas, if capital costs are included," he said.
"How is it possible for gas that has been extracted from the ground and put into pipelines for transporting to our cities be more expensive than gas produced overseas that is liquefied, shipped and then turned back into natural gas at an import terminal?"
"In recent years there has been a tripling in gas production on the east coast of Australia, yet prices have also tripled. As at 24 April the spot price of gas in Asia was $7.12 GJ while the gas price in Victoria was 28 per cent more at $9.11.
"We are seeing businesses like Sydney’s RemaPak and Laverton’s Coogee Chemicals shutting down because of gas prices, with more closures likely to come.
"We are seeing consumers paying through the nose for domestic gas and electricity, and yet the government has just sat on its hands.
"There is a cartel operating in our gas market and the government has done nothing.
"The extent of the domestic gas price gouge is such that its now economic to import gas into Australia. Global players have identified a high price market in Australia and the opportunity to supply that market with gas that collapsed in price in the world market.
"While the big gas companies are exporting all of our gas, they are also not paying tax.
"Tax Office transparency data shows that Santos paid no tax in FY16/17, despite an income of $3.7B. Shell paid no tax on income of $5.4B. ExxonMobil paid no tax on income of $8.3B. OriginEnergy paid no tax on income of $14.8B.
"This whole situation is a mess. There is a solution, but the Government is just too philosophically constrained that it has paralysed itself. We actually have an Australian Domestic Gas Security Mechanism (ADGSM) that could and should be activated to solve the problem."
The ADGSM came into effect on 1 July 2017 in direct response to negotiations between Centre Alliance and the Government over reductions in the corporate tax rate for companies with a turnover of less than $50 million.
It is a mechanism that is designed to ensure there is a sufficient supply of natural gas to meet the needs of energy users within Australia. If LNG project exports of gas result in a supply shortfall in a domestic market, those projects can be required to limit their exports or find new gas sources.
"The Government must activate the mechanism immediately, limiting exports so that there is a significant surplus in domestic gas supplies to push prices down," said Rex.
"The fact that we are seeing international players building import terminals speaks volume," he said.
The ADGSM operates on the basis of Division 6 of the Customs (Prohibited Exports) Regulations 1958.
"I can only hope Labor will activate the mechanism if it wins Government," Rex said.
"This whole thing is a disaster. We must be the laughing stock of the world. Aussies are good at laughing at themselves, but we shouldn’t in this instance - it's all just a bit too serious."