Via the AFR:
The Turnbull government has relaxed its threat to place curbs on LNG exports after the gas giants assured Prime Minister Malcolm Turnbull and his senior minsters they would provide enough fuel to fill the looming domestic shortfall for the next two years at least.
The meeting, the second this week, came after separate reports by the energy regulator and the Australian Competition and Consumer Commission warned of a shortfall of between 54 petajoules and 107 petajoules along the east coast over the next two years.
Following a longer-than-scheduled meeting in Sydney Tuesday with Origin Energy, Santos and Shell, Mr Turnbull said they have assured enough gas to meet domestic demand for 2018.
The companies agreed to sell 54 extra petajoules into the domestic markets via contract for 2018 and if more was needed, there would be enough on standby.
“That is their intention and (they) will respond further in more detail on 2019 when we meet again next week (on Tuesday),” Mr Turnbull said
Mr Turnbull said beyond 2019, the gas companies have also agreed to offer domestic customers any uncontracted gas as a priority, before it is sold into the international spot market..
Importantly, he said, the companies also agreed to report regularly to the ACCC to ensure greater transparency. They will have to report on sales, offers to sell gas and bids to buy gas from customers that they have declined.
“We will shine a light on what has been a very opaque industry and that sunlight will ensure more gas at better prices for Australians,” he said.
Mr Turnbull said extra domestic gas would still be about 11 per cent more expensive in the southern states because of the cost of getting there from Queensland. He again pressured the governments on NSW and Victoria to ease their bans on onshore gas development.
“The failure of Victoria and New South Wales to unlock their onshore gas resources means more gas will have to be shipped south at greater expense. It will mean that Victorians and residents of New South Wales will be paying more,” he said.
This is rubbish. Why is Turnbull busy brokering gas deals? Just set the rules and get out of the way.
This approach is way too flimsy, offering the prospect that we’ll turn an acute crisis into a chronic annual event. There’s been exploration of the gas market landscape done by AEMO and ACCC but there’s been no policy deliberation about how best to address its failure short, medium and long term. All we have here is desperate crisis management by an attention deficit disordered PM coupled with political blame-shifting onto the states which will need to brought in to any solution.
By implication it destabilises Australia’s entire decarbonisation project permanently.
I’ll reserve judgement on short term gains until we see the pricing but as policy and political process this is farce and the notion that it adds certainty for anyone is laughable.
Meanwhile, AGL flips Do-nothing the bird:
AGL Energy says a sale or extension of the life of the Liddell power plant in NSW is unlikely, with chief executive Andy Vesey instead outlining a plan to replace its output with one of the world’s biggest batteries and a gas power station, plus more renewables, demand management and a Bayswater coal power station upgrade.
But in a warning to a Coalition government that has stalled on energy policy, departing chairman Jerry Maycock said that even getting existing power stations to the end of their life will need policy certainty.
“A greater degree of certainty in policy and regulatory settings will be critical if AGL and others in the industry are to invest the capital that is urgently needed for, on the one hand, existing plant to reach the end of its operating life and, on the other, the new capacity that is needed when it closes upgraded coal-fired plant,” Mr Maycock told today’s AGL’s annual general meeting in Melbourne.
It is unclear whether the chairman was hinting AGL could close Liddell before its 2022 end date without more certainty.
Honestly, all we have done is hand the reigns of a bridling energy beast to a mercurial PM who is capable of turning in any direction from one minute to the next.
This is not how to manage a market, government or country.
