Gas shortages have made manufacturing almost "impossible" and LNG exporters should take action to help resolve the supply crisis, the chairman of the competition watchdog has warned.
Large industrial users have complained increasingly loudly about the availability of gas as prices have headed above more than $20 a gigajoule – a seven-fold increase over the $3-4 a gigajoule price that was on offer only recently.
More National News Videos
Gas debate heating up
Both sides of politics are talking up taking action to guarantee gas supplies, without saying what that action should entail. Courtesy ABC News 24.
"Australia often makes it hard to be involved in manufacturing. We are now making it extremely difficult, if not impossible, for some", the chairman of the Australian Competition and Consumer Commission, Rod Sims, will tell a gas conference on Tuesday.
In a copy of the speech supplied to Fairfax Media, Mr Sims points out that price rises of the order of magnitude "will perhaps permanently damage their businesses".
![The slide in the oil price has slowed gas exploration, exacerbating domestic gas supply woes.](/web/20170315174526im_/http://www.smh.com.au/content/dam/images/g/k/4/x/p/z/image.related.articleLeadwide.620x349.guwwac.png/1489387377397.jpg)
There are a number of manufacturers where gas accounts for as much as 40 per cent of their costs, he is to say, with some doubts that all of their gas demands can be secured.
"At best, it makes it hard for these companies to invest and plan with such high and uncertain gas prices and with considerable supply uncertainty. At worst, plants will close and jobs will be lost purely as a result of the current gas crisis," Mr Sims will say.
Crisis meeting
Mr Sims' comments come ahead of a meeting on Wednesday with Prime Minister Turnbull and the heads of the gas companies to clarify how they will address the crisis which stems from the lack of ready supply.
His comments come as the South Australian government is to detail a new energy plan on Tuesday centring on gas which is aimed at lowering energy prices and raising its electricity reliability.
"Gas is going to be key" of the intervention measures to be outlined, South Australian Energy Minister Tom Koutsantonis said on Monday.
![ACCC chairman Rod Sims has warned gas exporters to do what they can to support domestic supply.](/web/20170315174526im_/http://www.smh.com.au/content/dam/images/g/s/3/h/6/2/image.related.articleLeadwide.620x349.guwwac.png/1489401028807.jpg)
Queensland's gas export projects involve three consortiums of local and international oil and gas companies, with the principal domestic investors being Origin Energy and Santos and offshore investors include Shell and Chevron.
"The three [Queensland] LNG producers ... could not have foreseen that after their investment decisions were made east coast onshore gas exploration and development would be largely prevented," Mr Sims is to say on Tuesday.
![South Australian minister Tom Koutsantonis said gas would be central to the South Australian strategy for energy security.](/web/20170315174526im_/http://www.smh.com.au/content/dam/images/g/u/a/b/c/d/image.related.articleLeadwide.620x349.guwwac.png/1489403577967.jpg)
Victoria, for example, has banned all onshore gas exploration and production which has stopped even conventional gas projects, while projects in both NSW and the Northern Territory face "delays and uncertainty", he will say.
"It is of course up to governments to make such decisions. Having made them, however, it is difficult to see how people can then criticise the commercial contracts that were freely entered into by the LNG producers at a time when the likely supply outlook was very different," Mr Sims is to say.
"That said, if I was providing private advice to the LNG producers, I would say they would be well advised to support the domestic market as much as they can at this critical time."
They could, for example, decide not to sell extra gas into the spot market offshore, or they could develop additional gas for the domestic market, he will tell the conference.
Summit looms
Labor leader Bill Shorten on Monday said the government should be holding wider talks about the gas crisis.
"It's no good just talking to the gas companies without talking to the states and the consumers," he told reporters in Melbourne.
"It's a national emergency. We should be working together."
"We welcome the invitation from the Prime Minister to discuss the current gas market issues, so that we can work together to find solutions to increase supply and put downward pressure on prices for customers," a spokesman for Origin Energy said.
With AAP