I can’t find this paper, which is no doubt the intention, at The Australian:
Scott Morrison is moving to reassure gas producers that a domestic reservation scheme will not jeopardise investment or put at risk Australia’s $49bn LNG export market, while ensuring there is enough cheap gas available for east coast energy users that are facing a shortfall by 2023.
…An issues paper released by the Department of Industry and Resources this week, ahead of a one-month consultation process, states that consideration of options for a national gas reservation system was “taking place in an uncertain world with new risks”.
…APPEA, the oil and gas lobby group, pleaded with the federal government ahead of the budget to not advance a national domestic gas reservation policy. Western Australia and Queensland — the nation’s largest gas-producing states — already have domestic reservation policies in place.
The US and Canada also reserve the right to limit gas exports in the public interest, but neither country has used those powers.
The gas industry argues that reservation could “create greater risk and uncertainty for future gas projects”, putting at risk future production capacity.
“The COVID pandemic has bought a fall in international gas demand, LNG spot market prices have seen record lows and the international oil market, against which many LNG exports are pegged, has fallen,” the departmental issues paper states.
“This uncertainty has contributed to a historic writedown of oil and gas assets, with about $US12bn of Australian oil and gas assets written down by July.”
There’s more at the AFR:
“Consideration of options for a prospective national gas reservation scheme is taking place in an uncertain world with new risks,” it says.
“The COVID pandemic has brought a fall in international gas demand, LNG spot market prices have seen record lows and the international oil market, against which many LNG exports are pegged, has fallen.
“This uncertainty has contributed to a historic write-down of oil and gas assets, with around US$12 billion [$16.8 billion] of Australian oil and gas assets written down by July this year.
“Some industry commentators argue that reservation may create greater risk and uncertainty for future gas projects, potentially curtailing future production.
“It is important to consider how a prospective reservation scheme could be applied in a low oil and gas-price environment, where economic recovery will take place over an uncertain time frame, and where policy responses to the pandemic are evolving around the world.”
The discussion paper points out previously identified risks that locking away gas from any new project could deter foreign investment, especially during such a downturn. It also raises the potential for sovereign risk.
I am beyond being shocked so let’s just itemise the corruption here for future reference.
- A fall in the international price is irrelevant to domestic reservation. We need reservation to ensure low prices over the cycle.
- APPEA is an organised crime outfit misrepresenting itself as a lobby. It lies constantly to enable theft of gas resources by its members and should be explicitly excluded from all policy deliberation.
- WA has reservation. QLD only has a few tiny reserves for exploration. The US and Canada use reservation every single day by controlling new projects. Every other gas producer on earth has reservation because, without it, you end up exactly where Australia is, paying discriminatory prices for your own resources as the export monopoly leaves you short.
- Reservation for prospective projects is next to useless. Unless reservation blankets all projects then the export cartel just shifts more volumes offshore from unreserved acreage to sustain local market tightness.
- Oil and gas writedowns are normal and are irrelevant to reservation.
- There is no more foreign investment coming regardless of reservation. The global gas glut is huge which is why prices have crashed.
- The only sovereign risk is to Australia as the gas cartel occupies national interest policymaking to guarantee ongoing higher prices than anywhere else for our own gas.
The current tax cuts being enjoyed by all are a direct consequence of a deal struck between the Morrison Government and Centre Alliance to deliver gas reservation over existing projects in return for passing the tax cut legislation. That deal has been trashed and betrayed. Morrison straight up lied.
Coming on the heels of the Gas Unplan we are now headed for Gas Unreservation. This guarantees that the local gas market will remain tight and gas prices high, gas will be subsidised by the Government into greater use in the power grid, and power prices remain high in consequence.
Resource Minister Keith Pitt and the Morrison Government are captured by the east coast energy cartels. This is corruption in plain sight straight out of a Banana Republic.
To be honest, I have never seen more ruinous energy policy in my life, and that’s saying something.