APPEA 2017: LNG export controls a hot topic By Martin Kovacs, 15 May 2017

The APPEA 2017 Conference and Exhibition has commenced in Perth, with the introduction of export controls for LNG predictably a hot topic at the day one plenary session.

Minister for Resources and Northern Australia Matthew Canavan prefaced addressing the controls by describing respective moratoria in Victoria, the Northern Territory and New South Wales as “ridiculous, silly and stupid”, adding that they are “completely lacking any science, reason or logic”.

Canavan, however, stated that “the federal government cannot sit idly by while jobs are lost because people are paying higher gas prices here in Australia than they are in our major export markets in North Asia”.

“So, we have stepped in to introduce a gas export licensing system,” he commented. “This is not a move that I or the government has welcomed, or that we prefer, but we believe it's an appropriate, targeted and temporary response to the issues we are facing.”

Canavan acknowledged criticism that the system is “too targeted at particular groups and companies and consortia”, however stated that he rejects “that suggestion outright”.

“We have not designed the scheme to operate in that way, but of course we have designed the scheme to target the problem we face,” he commented.

Discussions will continue over the next few weeks, he stated, with the government intending to have the mechanism up and running by July 1.

Peter Coleman, Woodside CEO and Managing Director, stressed the importance of communication with the community, stating of industry that it is “time for us to unite as an industry and define our common purpose, mindful of the need to explain to the community how they benefit from our activities”.

“As an industry, we have been proud to carve out a role for Australia as a leading LNG export nation, but those boasts sound hollow if we cannot supply customers at home,” Coleman commented.

“To put it bluntly, we need to ensure some of the resources we develop are available for Australian consumers, and available at a price that is sustainable for both the customer and the producer.”

Coleman noted the importance of the government having “an overarching plan for energy security, guided by clear principles and reasonable objectives”.

“In the absence of a plan, the government will continue to resort to blunt instruments in response to short-term pressures,” he commented.

“While the arguments for the Australian Domestic Gas Security Mechanism are understandable, it is clearly not an enduring policy and it has the potential long-term impact of inhibiting additional development of domestic supply.”

Bruce Lake, APPEA Chairman, meanwhile, stated that “the Australian Domestic Gas Supply Mechanism is an unprecedented intervention”.

“APPEA has been warning, for years, that stifling new gas supply will have consequences for local customers as well as our export trade,” Lake commented. “These warnings have been ignored by states which have preferred to free-ride on interstate gas producers. It is startling that our two largest states have virtually no local gas production – and in the case of Victoria has banned onshore development.

“APPEA condemns export controls for damaging our international reputation as a low-risk destination for investors. At a time when we may require as much as $50 B to fund upstream development in eastern Australia, it is counterproductive to create sovereign risk.

“APPEA has insisted that only genuine policy reforms to open up new acreage, strip out unnecessary regulatory costs and improve the transparency of the market will deliver a sustainable solution.”