Policy doubt could derail domestic gas projects, Beach Energy warns

Australia is one of the world’s largest producers of gas, but massive volumes of production from Queensland’s gas fields are locked into long-term export contracts to LNG buyers, while several gas fields that have supplied southern markets from the Bass Strait for decades are entering rapid decline without new projects to replace them.

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Decisions on whether to proceed with two east coast gas supply projects – Cooper Energy’s offshore Otway Basin project known as OP3D, and Senex’s $1 billion Atlas project in Queensland – were put on hold pending the terms of the code of conduct.

Following the release of the code last week, Cooper Energy managing director Jane Norman has expressed support for new rules, saying they provide much-needed investment certainty to companies considering boosting production of the fuel.

“We welcome policy certainty and stability, in the form of the gas code, to facilitate investment into new gas supply,” she said.

Adelaide-based Beach Energy, the nation’s third-largest independent oil and gas producer, operates onshore and offshore gas production and supplies about 12 per cent of gas demand in the east-coast market via its Otway gas plant near Port Campbell and the Lang Lang Gas Plant south-east of Melbourne. All of Beach Energy’s east-coast gas is delivered domestically, while its under-construction Waitsia LNG project in Western Australia will be subject to the state’s domestic reservation requirement.

Engelbrecht said Beach was doing its part to bring more gas supply into the Australian east coast domestic market, but needed “policy stability” to make long-term investment decisions in the interests of energy security.

In a joint statement, Treasurer Jim Chalmers, Energy Minister Chris Bowen, Resources Minister Madeleine King and Industry Minister Ed Husic last week said the code would ensure gas was available for Australian users at reasonable prices, give producers the certainty they need to invest in supply and help to ensure Australia remained a reliable trading partner.

The government said gas producers had already made supply offers of at least 260 petajoules – the equivalent of about 40 per cent of typical east coast annual demand – out to 2027. “These indicative commitments will reduce the risk of shortfalls as assessed by the ACCC and AEMO,” the ministers said.

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