News National WA gas supplies may be tapped to solve eastern energy crisis

WA gas supplies may be tapped to solve eastern energy crisis

The government has described the crisis as 'a perfect storm'

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The federal government is talking to Western Australian gas producers to free up supplies for the east coast, as the nation battles an escalating energy crisis.

Prime Minister Anthony Albanese said Resources Minister Madeleine King and Energy Minister Chris Bowen had contacted the state’s big providers.

“We’re talking through with the sector how we can alleviate the immediate real pressure which is on businesses and households,” he told Perth radio on Friday.

Woodside chief executive Meg O’Neill flagged this week that the company might be able to supply some gas to the eastern states.

Increased demand for energy during this week’s cold snap across the south-east, unscheduled outages at coal-fired power stations and gas shortages due to the war in Ukraine have led to soaring gas and electricity prices across much of Australia. They have reached soared to as high as 50 times normal prices.

On Wednesday, the Australian Energy Market Operator triggered the gas supply guarantee mechanism for the first time since the measure was introduced in 2017, to secure gas for power generators and ward off a potential shortfall in southern states.

WA has a domestic gas reservation policy, quarantining 15 per cent of gas produced in the state for domestic use. WA’s gas is generally cheaper than elsewhere in Australia, and supply remains guaranteed.

Mr Albanese described the policy as “pretty visionary”.

“It has served the people of Western Australia well. Unfortunately those procedures weren’t put in place [for the rest of Australia],” he said.

“We did argue for the capacity of a domestic gas reservation for a long period of time. It was rejected by the former government.”

The former Coalition government did introduce the Australian domestic gas reservation mechanism, known as the gas trigger. But Labor argues that even if it was used immediately, there would be no changes until January 1.

“We’ve been through nine years of no energy policy. We had a lot of rhetoric from the former government about a gas-fired recovery for year, after year, after year and no real policy changes put in place that are appropriate. This is a direct consequence,” Mr Albanese said.

“It’s not all domestic considerations. Some of it is beyond the government’s control.”

Federal, state and territory ministers will meet to discuss the developing energy crisis. Deputy Prime Minister Richard Marles said the government would consider using whatever mechanism it could to counter tightening gas supplies across the east coast.

“We’ll be meeting with the regulator [and] with our state counterparts in a ministerial meeting next week to look at every available option here,” he told the Nine Network on Friday.

“The regulators already said that in initiating the gas supply mechanism they’re already seeing more gas supply into the south-east corner of the country, and that should have a short-term impact.”

Elsewhere, the government would work towards increasing renewable energy take-up in the medium to long term. But changes to the energy grid would take time, Mr Marles said.

Opposition Leader Peter Dutton called the characterisation a complete rewrite of history.

“This government went to the election saying they had the answers and clearly they don’t. You look at Chris Bowen now, he is like the bunny in the headlights and he has no idea which way to go,” Mr Dutton said.

“This is nothing to do with renewables. I think the government has to take responsibility for what is a serious issue.”

While international factors outside the control of Australia had affected markets, Mr Dutton said there were mechanisms to handle the changing circumstances.

“It seems to me that the inexperience of both Anthony Albanese and Chris Bowen is shining through. They have got the ability and the legislation there to deal with this and they don’t know what they should do,” he said.

Monash Energy Institute director Professor Ariel Liebman said Australian markets were exposed to international supply constraints with retailers shipping a vast amount of gas overseas.

“We have huge amounts of coal seam gas, which was allowed to be exported with none reserved for Australia, which has ultimately led to a situation where Australians are paying for gas prices at global parity,” he said.

“This would all have been preventable if successive governments had paid proper attention to rigorous monitoring and regulation of all the key energy markets in Australia.”

Professor Liebman said the government should pull the gas trigger to divert exports and shore up domestic supply.

“The best immediate solution would be to pull the so-called ‘gas trigger’ to requisition supplies of gas intended for export,” he said.

“In addition, the government should also seriously consider a full gas reservation policy for the entire country, similar to the one in Western Australia and the United States.”

-with AAP