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Doorstop, Australian Domestic Gas Outlook conference

15 March 2017

Subject: gas policy; state gas moratoriums

E&OE

MINISTER CANAVAN:

The Federal Government is focused on finding solutions to our domestic gas and energy needs. There are thousands of jobs in this country that rely on having access to affordable and reliable gas, both as a fuel for electricity but also as an essential ingredient in many manufacturing processes. That's why the Federal Government, within a week of Victoria banning gas development in its state, within a week of AEMO reporting on the difficulties we will have in the next few years to keep the lights on with gas-fired power, we have convened a high-level meeting in Canberra to try and find solutions. I and the government are very focused today on finding solutions.

I have already heard from many in the industry that they can bring more gas into the domestic market. That's what we need to see. We need to see the market respond and I'm willing to give the industry and those commitments a chance to work, to ensure that we can keep the lights on and keep all of these jobs as well.

REPORTER:
What are those options for companies to release more gas domestically?

MINISTER CANAVAN:
Well I'm not going to speak individually for companies, except to say that there has been an elevated price in Australia over the past year. It's more than doubled and in some cases, even higher than that. That obviously has changed the economics of providing gas domestically, and many companies are looking at how they can do that. As I mentioned in the speech, there is no doubt a lot of wealth can be created by developing our gas resources. What we need to see is the market respond to those opportunities and that we have that wealth shared between all participants in the market so that we can sustain gas developments over many years in this country.

REPORTER:
Minister, what is the government prepared to do though, if no market response is coming?

MINISTER CANAVAN:
Well as I said in there, I'd like to give peace a chance. Let's see what happens in the next few months. We, as I say, have not created this problem at the Federal Government level. Onshore gas resources are a matter for the states and territories. But maintaining our national energy security is a priority of the Federal Government. So, we are willing to step in, now that Victoria has banned its development, to do what we can. We obviously will only export our natural resources when it's in our national interest and that is the role of the Federal Government. So, we'll be looking for a response. The best response will be one that is market-driven and led by the industry. So, let's see if we can make that work.

REPORTER:
Are you going to be imposing some kind of deadline for more gas to come to market, and are you ruling out gas reservation?

MINISTER CANAVAN:
Well I don't think arbitrary timelines or deadlines are necessary. Our objectives are clear, and that is to maintain the affordability of gas as a fuel for electricity generation, and also to maintain security for the thousands of jobs in our manufacturing sector. In terms of reservation policies, I don't think they’d be the best outcome. I think they’d be a band aid solution which would be unlikely to be effective in the short term, and would be quite damaging in the long term. Let's hope we don't get there. I know there are increasing calls for it. I understand why people are searching for options here, but the best option, the best outcome, will be for the market to work and the industry to respond to the situation in the domestic gas market currently.

REPORTER:
Is there a circumstance where the government will consider restricting LNG exports?

MINISTER CANAVAN:
Well as I say, our paramount objective is to maintain energy security in Australia. I think we can achieve that working with industry cooperatively, so let's see if that happens.

REPORTER:
Can I just check, is there any mechanism to overturn the moratoriums in the states of Australia?

MINISTER CANAVAN:
Well as I say, it's a state government resource. Land management is not a matter for the Federal Government, so I don't see a pathway where that can happen without the agreement of the states. All I can do is point out what I think is the error of the ways of some of those state and territory governments. All I can do is be ready and able to work and co-operate with those states that want to develop gas by using the resources of the CSIRO, other forms of co-operation with Federal Government officials. But it is a matter for the states and territories. At some point though, of course, Victoria has to realise that it can't have its cake and eat it too. If it wants to maintain its competitiveness as a manufacturing state, it needs to develop its own resources. A lot of the other options we're talking about, gas from Queensland, from the Northern Territory, from other areas, are not going to be particularly cheap forms of gas and therefore they will put at risk Victoria's strong manufacturing position, unless Victoria can develop its own resources close to those manufacturing industries.

REPORTER:
Should LNG imports be on the table do you think?

MINISTER CANAVAN:
Well look, that's obviously a commercial matter. Again, I think the importation of any LNG is not going to be a particularly cheap solution. So, it's a matter for the commercial market though to potentially respond. Obviously, there is one company looking at that in detail. The unfortunate thing for this country, the disappointing and frustrating thing for me, is that we don't have a shortage of gas resources in this country. We have plenty of gas. We should be an energy superpower. We should be able to export a lot of that to the world, sustainably. But we are not at the moment because of these bans and moratoria. And of course, if those blanket bans and moratoria stay in place, of course companies are going to look at alternatives, alternatives that I think are inferior.

REPORTER:
Is the Government willing to take the PRRT review off the table in order to encourage companies to go ahead with more development?

MINISTER CANAVAN:
Look I think those things are two very separate issues. The PRRT review that we announced late last year has to be seen in the context of a lot of complaints, particularly raised in the media, that we are not receiving a sufficient return to the taxpayer on gas development. Now that is a legitimate concern, but it's important to get to the bottom of that. And I'm confident that this review will highlight in detail what exactly the situation is, any particular change that might be able to be made, consistent with the core objective of the government to maintain Australia as an attractive destination for investment. And the objective of the PRRT and our broader tax policy settings is not to maximize tax revenue for the government, it's to maximize economic opportunity for all the Australians, including a dividend to the taxpayer on the development of our resources.

REPORTER:
Has the Federal Government received any advice yet on the South Australian plan, and whether that contravenes any aspect of the national energy market?

MINISTER CANAVAN:
Well look, that's not my area of responsibility. I'm aware that we are seeking that advice. But you would have to check with the Minister for Energy on the status of that.

(ENDS)