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Gas companies risk 'social licence' by failing to supply domestic market, Turnbull says Gas companies risk 'social licence' by failing to supply domestic market, Turnbull says
(about 2 hours later)
Malcolm Turnbull has warned that gas companies risk their “social licence” to operate without reservation quotas if they fail to supply Australian domestic industry.Malcolm Turnbull has warned that gas companies risk their “social licence” to operate without reservation quotas if they fail to supply Australian domestic industry.
Turnbull made the comments at a doorstop in Canberra before his meeting with the gas companies on Wednesday aimed to force them to increase domestic supply.Turnbull made the comments at a doorstop in Canberra before his meeting with the gas companies on Wednesday aimed to force them to increase domestic supply.
It comes as the energy and environment minister, Josh Frydenberg, has supported South Australia’s plan to incentivise landowners to accept development of gas resources. He also suggested gas companies should release more supply to the domestic market without a reservation policy.It comes as the energy and environment minister, Josh Frydenberg, has supported South Australia’s plan to incentivise landowners to accept development of gas resources. He also suggested gas companies should release more supply to the domestic market without a reservation policy.
When asked about imposing a reservation policy, Turnbull said the federal government had “considerable power” to control exports, but said his aim was to “ensure we have action from the gas companies”.When asked about imposing a reservation policy, Turnbull said the federal government had “considerable power” to control exports, but said his aim was to “ensure we have action from the gas companies”.
“The gas companies – I have no doubt – are very well aware they operate with the benefit of a social licence from the Australian people.“The gas companies – I have no doubt – are very well aware they operate with the benefit of a social licence from the Australian people.
“And they cannot expect to maintain that if while billions of dollars of gas are being exported, Australians are left short.”“And they cannot expect to maintain that if while billions of dollars of gas are being exported, Australians are left short.”
Earlier on Radio National, Frydenberg said Turnbull would tell gas companies the government wanted them to produce more gas for the domestic market, including by developing their untapped reserves faster.Earlier on Radio National, Frydenberg said Turnbull would tell gas companies the government wanted them to produce more gas for the domestic market, including by developing their untapped reserves faster.
Frydenberg said prices had increased due to increased export of liquid natural gas, less investment in exploration due to low oil prices, and gas moratoria in several states.Frydenberg said prices had increased due to increased export of liquid natural gas, less investment in exploration due to low oil prices, and gas moratoria in several states.
But the increases had not been sufficient to incentivise development of reserves, which Frydenberg said amounted to 180 years’ supply in the Northern Territory and 40 in Victoria.But the increases had not been sufficient to incentivise development of reserves, which Frydenberg said amounted to 180 years’ supply in the Northern Territory and 40 in Victoria.
Asked about potential shortages next summer, Frydenberg noted the companies had existing supplies that they could release into the domestic market in the meantime.Asked about potential shortages next summer, Frydenberg noted the companies had existing supplies that they could release into the domestic market in the meantime.
Frydenberg said gas reservation is a “double-edged sword” that could increase supplies in the short term but decrease incentives to invest in exploration and extraction.Frydenberg said gas reservation is a “double-edged sword” that could increase supplies in the short term but decrease incentives to invest in exploration and extraction.
Asked if he supported a gas reservation policy, Frydenberg said he was not backing the idea because the government “wants industry to lead”.Asked if he supported a gas reservation policy, Frydenberg said he was not backing the idea because the government “wants industry to lead”.
The comments suggests that Turnbull, who has so far not ruled out a gas reservation policy, is wielding the possibility as a threat to force gas companies to take action without further regulation.The comments suggests that Turnbull, who has so far not ruled out a gas reservation policy, is wielding the possibility as a threat to force gas companies to take action without further regulation.
Frydenberg said he was “very concerned” about South Australia’s plan to give its energy minister powers to direct the Australian Energy Market Operator (AEMO) to control flow on the South Australia’s interconnector.Frydenberg said he was “very concerned” about South Australia’s plan to give its energy minister powers to direct the Australian Energy Market Operator (AEMO) to control flow on the South Australia’s interconnector.
The federal minister is seeking advice about whether that plank of the policy is in breach of market rules.The federal minister is seeking advice about whether that plank of the policy is in breach of market rules.
He said the national energy market rules “do need to be reformed” and the government was working with the Australian Energy Market Commission on changes, like setting prices on a five-minute, not 30-minute, period which would encourage more battery storage.He said the national energy market rules “do need to be reformed” and the government was working with the Australian Energy Market Commission on changes, like setting prices on a five-minute, not 30-minute, period which would encourage more battery storage.
Frydenberg said it was “unfortunate” that South Australia had acted ahead of reviews of the rules, including the Finkel review of energy security.Frydenberg said it was “unfortunate” that South Australia had acted ahead of reviews of the rules, including the Finkel review of energy security.
But Frydenberg praised South Australia’s decision to “incentivise landowners to get more of the pie when they develop the gas reserves on their land”, and encouraging more battery storage.But Frydenberg praised South Australia’s decision to “incentivise landowners to get more of the pie when they develop the gas reserves on their land”, and encouraging more battery storage.
“What we don’t want to see is the national market fragment by states taking ... decisions in their own jurisdictions which could be to the detriment of other jurisdictions.”“What we don’t want to see is the national market fragment by states taking ... decisions in their own jurisdictions which could be to the detriment of other jurisdictions.”
The South Australian premier, Jay Weatherill, told Radio National his plan gave the energy minister easier access to emergency powers which already exist as part of market rules.The South Australian premier, Jay Weatherill, told Radio National his plan gave the energy minister easier access to emergency powers which already exist as part of market rules.
“We have to go through a lengthy bureaucratic process ... and have a state of emergency existing before we can act. This is to act before an emergency occurs.“We have to go through a lengthy bureaucratic process ... and have a state of emergency existing before we can act. This is to act before an emergency occurs.
“We had this absurd situation on the 8th of February when everybody knew a heatwave was coming that the Australian Energy Market Operator chose to black out South Australians rather than turn on Pelican Point gas-fired power station.”“We had this absurd situation on the 8th of February when everybody knew a heatwave was coming that the Australian Energy Market Operator chose to black out South Australians rather than turn on Pelican Point gas-fired power station.”
Weatherill said that was “unacceptable” and the national electricity market was “broken”.Weatherill said that was “unacceptable” and the national electricity market was “broken”.
Weatherill said the new powers would overcome “market power concentrated in the hands of a few companies” that were used “to screw” South Australian consumers by limiting power supplies to increase prices.Weatherill said the new powers would overcome “market power concentrated in the hands of a few companies” that were used “to screw” South Australian consumers by limiting power supplies to increase prices.
Weatherill blamed the Abbott and Turnbull governments for national energy shortages, saying the abolition of a carbon price had resulted in an “investment strike” that had pushed up the price of energy by under-investment in generation.Weatherill blamed the Abbott and Turnbull governments for national energy shortages, saying the abolition of a carbon price had resulted in an “investment strike” that had pushed up the price of energy by under-investment in generation.
Later on Wednesday, Weatherill opened expressions of interest for companies wanting to provide 100MW of energy or more through battery storage.
On Sunday the Tesla founder, Elon Musk, spoke to Weatherill about providing battery power to South Australia and separately to Turnbull.
Weatherill said the state’s desire to source battery power with its $150m renewable technology fund, announced on Tuesday, had resulted in approaches from ZEN Energy, Carnegie, Lyon Energy and Tesla.