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Australian Domestic Gas Security Mechanism to safeguard supply

1 July 2017

The Australian Domestic Gas Security Mechanism (ADGSM) is now in effect.

Minister for Resources and Northern Australia, Senator Matt Canavan, said the ADGSM would allow the Government to intervene, if necessary, to ensure adequate gas is available to Australian homes and businesses.

The Minister will use assessments including from the Australian Energy Market Operator (AEMO), the ACCC and industry to determine later this year whether 2018 will be a shortfall year, and whether export licences will be necessary from January 1.

“AEMO’s revised gas forecast shows that domestic gas supply and demand remain finely balanced.  We need to be able to act should critical gas shortages arise that might impact on manufacturers and households,” Minister Canavan said.

“These forecasts are welcome but while the potential for gas shortfalls remains we’re not going to roll the dice on Australian jobs.

“Securing our domestic gas supply should also put downward pressure on the price paid by Australians and should help to achieve parity between local and international prices.

“The LNG sector is important to our economy, through its substantial contributions to GDP, employment and business opportunities including in many regional and rural areas.

 “But subjecting Australians to gas shortages while Australia becomes the world’s largest LNG exporter, is simply unacceptable.

 “I have been pleased by the constructive approach from LNG producers in discussions since March as we have developed new guidelines and regulations to give effect to the new mechanism."

Minister Canavan said the Government’s longer term goal was to increase the domestic gas supply and boost competition, and improve transparency and efficiency of the gas market supply chain.

“This measure alone cannot solve all of these issues. That’s why we are spending over $90 million to bring on new gas supplies as well as supporting affordable energy prices through gas market reform,” Minister Canavan said.

“The package includes $28.7 million to accelerate responsible development of onshore gas, delivering benefits to landholders and the community and providing better information on landholder rights and the environmental impact of gas development.

“The Australian Government is working co-operatively to encourage exploration and identify new gas supplies, but we expect the States and Territories to show the same commitment to Australia’s domestic gas supply.”

Media contact: Minister Canavan's office 02 6277 7180