Australia plans to extend gas price cap till mid 2025
The Australian government plans to extend the gas price cap of A$12 ($8)/gigajoules announced late last year till at least July 2025, it said on April 26. The cap can, however, be relaxed for big producers who agree to domestic supply commitments and small producers who supply only to the local market.
The government said that the proposals come after consultation with gas producers and users over previous months, adding that the mandatory code of conduct (gas code) improves upon the approach to implementing reasonable pricing outlined in the December 2022 consultation paper.
“The gas code will ensure sufficient supply of Australian gas for Australian users at reasonable prices, give producers the certainty they need to invest in supply, and ensure Australia remains a reliable trading partner by allowing LNG producers to meet their export commitments,” the energy minister, Chris Bowen, the resources minister, Madeleine King, and the industry minister, Ed Husic, said in a joint statement.
“The release of the gas code consultation today gives stakeholders an opportunity to provide technical feedback on the draft regulations before the code is finalised ahead of the new financial year,” they added.
Australian parliament on December 15 passed the bill to cap gas prices at A$12/gigajoule for 12 months and set up a A$1.5bn fund to deliver relief directly to electricity bills. The government has now proposed to extend the price cap till July 1, 2025.
The Australian oil and gas industry has been critical of the move. Australia’s peak oil and gas body Appea has slammed the decision saying the energy reform package will push up gas prices for households and businesses after the intervention “smashes" investment confidence in Australia.
Australia’s biggest gas producer Woodside on December 13 said that the federal government’s plan to cap gas prices will not meet the objective of bringing down the cost of living pressures for households and could make matters worse.
Senex Energy, majority-owned by Korea’s POSCO International, will suspend the A$1bn expansion plan for its Atlas gas project in Queensland amid the federal government’s decision to cap gas prices, it said last year.
In August 2022, Senex announced plans to expand its Atlas and Roma North natural gas developments in Queensland’s Surat basin. These developments are planned to increase the company's production to 60 petajoules/year.
In September 2022, Senex commenced an expression of interest (EOI) process for the supply of gas from the Atlas investment starting in 2024 until 2039. Senex subsequently received offers oversubscribing the available supply by more than five times in the early years of supply, and with “solid interest” extending out to 2039.
“Whilst Senex continues to engage with these customers, these new laws have made it impossible to contract with confidence and put this investment, and therefore new gas supply to homes and industry, at risk,” the company said.