In an email to customers on Monday night, Shell said its onshore gas business QGC would not be accepting any new offers to supply the 50 petajoules of gas it had been offering under the agreement as it assessed the impact of the Albanese government’s proposed reforms.
On Tuesday, Woodside, which supplies about 20 per cent of east-coast gas demand from the Gippsland Basin gas operations it owns with ExxonMobil, confirmed it had suspended a sales process for 50 petajoules of gas in 2023 and 2024, which had attracted more than 20 buyers, and paused other domestic marketing activities.
‘Unfortunately, the proposed market intervention will make it very difficult for industry to economically invest to increase supply.’
Woodside chief Meg O’Neill
Woodside chief executive Meg O’Neill called on Prime Minister Anthony Albanese to reconsider the proposed reforms entirely.
“We need to unlock gas supply now,” O’Neill said. “Unfortunately, the proposed market intervention will make it very difficult for industry to economically invest to increase supply.”
Ongoing east-coast investments would be crucial to ensuring gas-fired generators could provide the on-demand electricity to support the rollout of renewable energy and meet decarbonisation targets “without the lights going out”, she said.
The gas industry is pushing back strongly against the government’s plan to set the $12 cap on uncontracted gas next year, as well as a controversial, longer-term proposal to fix the price of gas-supply agreements from 2024 based on the cost of production plus a “reasonable” profit margin.
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Shell is due to meet Resources Minister Madeleine King and the other LNG exporters – Origin’s APLNG and Santos’s GLNG – on Thursday and will discuss whether a landmark “heads of agreement” struck in September to boost domestic supplies next year still stands.
Although a clause in the deal allowed signatories to reopen negotiations in the event of a “material change in circumstances”, King said it was her expectation producers would uphold their commitments made in September.
Industry Minister Ed Husic on Tuesday cautioned the companies to “consider their steps very carefully”.
“These companies have made big profits when gas prices were way lower, and they can continue to make profits … but we have a responsibility as a government for the broader community as well,” he told the ABC.
“There are broader Australian companies that need a fairer deal so they can make a profit, they can secure jobs, and again we’ll do what is right in the national economic interest, and we would expect that others recognise that and act accordingly.”
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