Source : Perth Now news
One of Australia’s biggest energy companies has vowed to stop taking gas off the domestic market for overseas exports at a controversial Queensland plant.
Santos has faced criticism for dipping into domestic gas supplies to meet demand for massive export contracts at its Gladstone Liquefied Natural Gas (GLNG) project.
Critics say the project has driven shortfalls in the domestic market and is a key reason behind the federal government’s decision to introduce a domestic gas reservation for Australia’s east coast.
But in an address to the National Press Club in Canberra, chief executive Kevin Gallagher vowed the Gladstone project “will not contract any third-party gas going forward”.
“It will meet its commitments and mitigate any shortfalls through other means,” he said on Wednesday.
But Tim Baxter, owner and founder of consultancy group Naru Research, said Santos had previously told investors that it saw its Australian operations as a chance to secure higher margins to benefit shareholders.
“After the way its GLNG project has distorted the east coast gas market and driven up prices, Santos has no right to give a self-interested lecture on energy security,” Mr Baxter said.
The commitment from the Santos boss came as the federal government prepares the final stages of the gas reservation scheme, which will require LNG producers to sell the equivalent of 20 per cent of exports to the domestic market.
Mr Gallagher warned that would flood the domestic market, crashing the price of gas and risk future gas supply.
Instead of he called for the reservation to require exporters to “offer” gas to the domestic market on commercial terms, similar to the reservation currently in place in Western Australia.
“I have publicly supported domestic reservation as part of its development since 2018, and the time to put a reservation policy in place is now, before billions of dollars are invested,” Mr Gallagher said.
While the “must-sell” requirement has drawn scrutiny from the energy sector, it has been supported by manufacturers, business groups and unions.
“Santos insisting that any reservation only requires them to ‘offer’ gas to domestic users, rather than actually supply it, is code for retaining the failed status quo,” said Australian Workers Union national secretary Paul Farrow.
“Current regulation already includes a ‘must offer’ requirement and all it has delivered is high prices, supply uncertainty and lost jobs.”
