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    Australia proposes to extend gas security mechanism till 2030

Summary

The mechanism enables the government to restrict LNG exports should there not be a sufficient supply of gas at home.

by: Shardul Sharma

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Australia proposes to extend gas security mechanism till 2030

The Australian government has proposed an extension of the Australian Domestic Gas Security Mechanism (ADGSM) until 2030 to ensure the mechanism can be available to help secure ongoing domestic gas supplies for the next decade, resources minister Madeleine King said on July 5.

King said the existing ADGSM is an important tool that the government could use to ensure the ongoing security of Australia’s domestic gas supplies but has some clear shortcomings. It is currently due to expire on January 1, 2023.

The ADGSM was introduced by the Australian government in 2017. The mechanism enables the government to restrict LNG exports should there not be a sufficient supply of gas at home. Subsequently, the east coast LNG projects, Australia Pacific LNG, Queensland Curtis LNG, and Gladstone LNG all agreed through a heads of agreement (HoA) to ensure they would keep the east coast market supplied.

Minister King has previously announced a separate review of the ADGSM to ensure the mechanism is fit for purpose. This current consultation is on the extension of the existing ADGSM as required by law.

“We are opening public consultations on extending the ADGSM to 1 January 2030, to ensure the government continues to have access to the emergency mechanism to reserve gas for domestic supply in times of a supply shortfall,” the minister said. The government will also renegotiate the HoA with east coast LNG producers.

King will hold top-level meetings with Australia’s major gas suppliers during the consultations, as well as key international counterparts.

“Australia remains a long-term and reliable supplier of resources and energy, and is a crucial supplier of LNG to our trading partners in north Asia. We remain committed to contributing to global energy security and working with international partners to address current global challenges,” King said.

Australia’s peak oil and gas body Appea said the industry will work constructively with the government during consultation over an extension to the ADGSM.

“Australia needs to be conscious of the signal any consultation sends to our longstanding trade and investment partners who have invested in the Australian economy because of our investment stability and purchase our gas at great benefit to the Australian people,” Appea acting CEO Damian Dwyer said.

Dwyer said it was important any policy changes in response to recent east coast energy market pressures focused on the now well-established problems – coal-powered generation outages and renewables dropping out of the grid, resulting in an extraordinary demand for gas in a very short period.