New gas deals signed to shore up domestic supply as Greens move to abolish new industry code

Two new deals have been signed between the federal government and major gas exporters aimed at shoring up Australia’s gas supplies. (©pichitstocker – stock.adobe.com)

Two new deals have been signed between the federal government and major gas exporters aimed at shoring up Australia’s gas supplies.

But the government is facing a political challenge to its new mandatory gas code of conduct, which underpins the new deal, as the Greens move to abolish the code.

The new deals will see gas producers Senex and Australia Pacific LNG commit up to 300 petajoules (PJ) of gas to the Australian market through to 2030.

The government estimates 300PJ could supply east coast industrial gas users for two years.

The Australian Energy Market Operator and the ACCC have warned of gas shortfalls in coming years, with supply falling faster than projected demand.

The AEMO has previously suggested that without new domestic supplies opening up, gas currently set aside for export may be required in the domestic market.

Under the new mandatory gas code of conduct, gas suppliers face a price cap of $12 a gigajoule in the domestic market unless they meet certain exemptions.

Making short-term supply commitments to the east coast market can count as an exemption, including the new deals signed by Senex and Australia Pacific LNG.

Energy Minister Chris Bowen said the deals would ensure supply was available for households and industrial gas users.

“The new commitments will provide more affordable gas to the Australian market in the short to medium term and will provide the energy security that Australia needs as it makes its transition to net zero emissions,” he said.

Greens look to abolish gas code, with possible Coalition support

The Greens strongly oppose the gas code of conduct, and will look to use federal parliament’s powers to abolish it, possibly with the Coalition’s support.

On Monday, the Senate will consider a motion to abolish the code, which the Greens argue helps to prop up an industry that should be winding down on a path to net zero emissions.

The Greens oppose an element of the code which encourages gas suppliers to invest in new projects, to help bring more gas supply to the market.

Under the code, investment in new gas projects can count as an exemption to the price cap.

Greens leader Adam Bandt argues the code sends exactly the wrong message about the future of gas.

“You get an exemption from provisions of this code if you open up new gas fields,” he said.

“That that is not the way to tackle the energy and the climate problems that the country is facing.

“There is plenty of gas in Australia. Labor is sending a lot of it offshore.”

The Coalition is yet to take a position on the motion, leaving open the possibility it could support the Greens’ move.

The gas industry has previously criticised the code of conduct for “putting the government at the centre of the gas market”, but has also indicated its willingness to work within it.