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Transcripts from the Prime Ministers of Australia

Transcript 40818

Press Conference with the Minister for the Environment and Energy, Minister for Resources and Northern Australia, and the Minister for Industry, Innovation and Science

Photo of Turnbull, Malcolm

Turnbull, Malcolm

Period of Service: 15/09/2015 to 24/08/2018

More information about Turnbull, Malcolm on The National Archive website.

Release Date: 15/03/2017

Release Type: Transcript

Transcript ID: 40818

Subject(s): Roundtable meeting with gas industry

Location: Parliament House, Canberra


Good afternoon. We’ve just finished a meeting with east coast gas producers. They have given us a commitment – a guarantee – that gas will be available to meet peak demand periods in the national electricity market. The implementation arrangements are going to be developed with the market bodies and the other industry participants and we’ll be meeting again in a month.

It is vital that Australians have access to reliable, secure and affordable gas, whether it’s for the generation of energy, electricity, or whether it’s for industry, families and households.

Now the producers also agreed to make more gas available to the domestic market as soon as possible. They’re going to revise their domestic gas production forecasts. That will enable the energy market operator to provide a revised supply outlook

As you know, last week the operator provided a projection which showed a shortage of gas supply in the eastern market with deep implications for energy security. Two of the east coast LNG exporters AGLNG and QGCLNG have given a commitment to being net domestic gas contributors. That’s to say they’ll be putting more gas into the domestic market than they’re taking out of it.

The Third, GLNG, is taking the matter on notice.

Now, we’re going to increase the transparency of the market. Its vitally important that Australians understand what’s going on in the gas market. So the work of the ACCC and Dr Mike Vertigan will continue in that regard - and the focus is going to be on the full supply chain - producers, pipeliners, transporters, retailers.

We've agreed - absolutely agreed - that we must continue the pressure on State and Territory governments to revisit the restrictions on gas development and exploration.

Only last week, the Victorian Government passed through their parliament a law which effectively bans not just unconventional gas development in Victoria onshore, but conventional onshore gas development, so without any fracking.

We have also agreed that the gas market reforms will be accelerated. These are going to improve pipeline capacity trading and gas trading markets. We are determined to make this market much more transparent.

But the fundamental outcome of the meeting is this: that the producers have given us a guarantee to ensure that gas is available for the national electricity market. So there won't be a repeat of a situation where a gas-peaking power plant is called on by the regulator to produce electricity during a heatwave, and there's no gas available. That won't happen again, consistent with the guarantees we've been given.

So we'll be meeting again in a month. We are focused on ensuring, as I said, that all Australians have access to secure and affordable energy, secure and affordable gas.

We are a massive gas exporter. It is utterly untenable, unacceptable, for us to be in a position where domestic gas consumers - whether it's generators, whether it's businesses and industry, or whether it's families - cannot have access to affordable gas.


Prime Minister you mentioned the two providers agreed to becoming domestic suppliers of gas. Do they do that at the expense of exports, or are they doing that because they can increase their production from current levels?


That’s a matter for them as to how they manage the balance between domestic and export. But they understand the absolutely critical importance of maintaining their social licence to be doing business in Australia. That requires them to put Australians in the position where they know they've got sufficient gas for the domestic market.


With the three processors on Curtis Island, one of them, GNLG, has a second train where its business model seems to be based on taking gas out of the domestic market. You mentioned they're taking this matter on notice, but they haven't given you a commitment? Are you concerned that they haven't given you a commitment? Is there anything the Federal Government can do to make sure it's not taking too much gas out of the domestic market?


The Commonwealth Government has enormous power in this area, as you know. We have the ability to control exports. So what we're seeking from the industry - and they understand the context in which their commitments are being sought - what we're seeking from them are commitments that ensure that the domestic gas market is well-supplied. That's fundamental. They understand that. They understand it very well. All of the participants around the table understand it also.


However you spin it, this looks like market intervention, especially your last comment: “We have the ability to control exports.” It sounds like sovereign risk. But are you suggesting that they should be, or have you promised any compensation, for this market intervention?


You're jumping way ahead of yourself there, with great respect. The Commonwealth Government, plainly, has considerable power - constitutional power - in respect of exports. Obviously, that's in the Constitution.


Sounds like a threat though, PM.


Please let me go on. We have that power. We want to see more gas produced in Australia. Here's our objective: more gas produced, more gas exported, more gas available to create thousands of Australian jobs, and warm Australian homes, and generate Australian electricity. So that's what we're looking for.

We're looking for more gas production. But equally, we have a responsibility - which we do not shirk from - to ensure that there is adequate gas supply for the Australian domestic market. So that's the context in which we had the meeting.


Prime Minister, did the issue of a gas reservation come up in your discussions with the gas executives today? Does the guarantee that the gas industry has given you today, is that sufficient for the Government to take the reservation off the table? Last week, you left it on the table.


Let me say this to you. All of the powers that we have under the Constitution, we reserve to be able to be used as and when the national interest demands it. That's the first point.

The second point is, what we've sought from the industry is the commitment to ensure that the domestic market has the gas supplies it needs. Now, you've heard the commitments that we've had, in particular, the guarantee that there'll always be gas available for the electricity generation sector. Clearly, we've seen the consequences of what can happen if gas is not available for peaking power.

We've made considerable progress today. But there is more work to be done. The considerable powers the Commonwealth has are obviously ones that we would never shirk from using, in the national interest. Never, ever shirk from using in the national interest.


[Inaudible] have they announced they're going in Darwin, in a dispute between two companies up there involved in a gas project. It's been suggested the Government is trying to bring these companies together. Is that something you’ll do? If not that, what can the Government do?


I'm not sufficiently aware of the circumstances you're talking about there?


The Inpex gas project.


Oh, you’re talking Inpex? It's a very important project. It's a vitally important one. But it is not part of the east coast gas market that we've been focused on today.


Will this make any difference to the prices currently paid by industrial users for long-term supply contracts which these manufacturers warn are debilitating and will lead to job losses?


The domestic market needs to have adequate - in terms of volume - gas available. It needs to have the gas available and it needs to be at affordable prices. So what we've seen is a reduction in the availability of gas in the domestic market. It's been driven by a number of factors.

Let's not forget the culpability of State Governments, indeed, in particular the Victorian Government. That notwithstanding Daniel Andrews presiding over the closure of a power station that generates 22% of his state's electricity and committing himself to lower emissions, at the same time as he's done that, he has banned gas exploration and development in his state onshore, even though he knows Victoria has enormous gas resources.

So you know, the illogic, the recklessness of that policy, that is what is undermining the gas market.

Fundamentally, what we’re committed to do, and the industry has committed to do, is to ensure that the domestic market has the gas it needs. Now, we want the market to operate. We want there to be as much freedom in the market to operate. We want there to be as much investment as possible. But I stress, we will not shirk from any measures that would be required - if all else fails - to protect Australian businesses, jobs and families. That's the fundamental point.


Just to answer the question, will this announcement today make any difference to the prices being paid to the large industrial gas users in Australia?


That will depend on the amount of gas that is available. My expectation is ‘yes’, but time will tell.

The gas producers are very much aware - my colleagues, we're all there - they are aware that their business depends on a social licence. It is fundamental for Australians to be able to have the gas they need. There's no point boasting about being – shortly -  about being the largest exporter of liquefied natural gas if you don't have enough gas at home.

So gas availability and affordability in Australia is the priority. The industry understands how important it is to the Government, and to the Australian people, from whom they get the social licence they need to operate. On that note, I thank you all very much.


Transcript 40818