Australia to consider reserving some gas for home market
* Potential gas reservation only for future projects
* Western Australia's gas reservation to remain in place
* States urged to lift drilling bans
(Adds resources minister comment)
MELBOURNE, Aug 6 (Reuters) - Australia, the world's top
liquefied natural gas exporter, on Tuesday said it would
consider forcing gas producers to reserve some supply for the
domestic market, as it looks to cut energy bills for households
Resources Minister Matthew Canavan and Energy Minister Angus
Taylor said they would review a range of policies, including
so-called gas reservation, pipeline access and price
transparency to come up with options by February 2021.
Australian conservative and Labor governments have long
resisted calls for domestic gas reservation on the view that
interfering in the market could distort prices and deter new
production in the long run.
However, following a tripling in wholesale gas prices over
the past five years after the start-up of liquefied natural gas
(LNG) exports from eastern Australia, the government has come
under pressure to boost supply and cut prices.
"Past approvals of large gas export projects have not
adequately considered the impact on the domestic gas market and
that has contributed to some of the pressures we have seen in
recent years. We cannot afford to repeat these past mistakes,"
Taylor and Canavan said in a joint statement.
Any gas reservation would not affect the state of Western
Australia and would only apply to future developments, Canavan
said in a televised media conference.
Two years ago the government introduced the controversial
Australian Domestic Gas Security Mechanism, which requires the
resources minister to decide each year whether to limit LNG
exports from Queensland state to avert any forecast local
So far it has not pulled that trigger, and now plans to
review the mechanism. Taylor and Canavan also said they would
pressure states to lift their restrictions on onshore gas
Gas-reliant manufacturers, such as chemicals makers, steel
makers and food processors, have long called for gas reservation
to boost supply as soaring energy prices have hurt profits and
led to plant closures.
They point to cheap prices in Western Australia, the
country's biggest exporter of LNG, which has long required
producers to sell 15% of their output to the domestic market.
"If we want to power a resurgence in Australian
manufacturing ... then there is no more important task than
reforming the domestic gas market," industry group Manufacturing
Australia said in a statement.
Australia's petroleum industry said it would work closely
with the government on its gas policy review, but warned that
market intervention could come at a cost, including increasing
the perceived risk of doing business in the country.
(Reporting by Sonali Paul; Editing by Stephen Coates and Joseph
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