Australia has hundreds of years of gas in the ground. It should never have a gas shortage. But this means it has to have the right investment settings to attract investors to develop new gas fields from the Otway in Victoria to the Beetaloo in the Northern Territory.The announced domestic gas reservation scheme would only undermine the investment case for new gas development because its stated aim is to oversupply the domestic market and force prices down. The Australian Competition and Consumer Commission has been clear: once transport and a reasonable return on capital are included, the marginal cost of new supply sits at about $12-$13 a gigajoule – and rising. Contract prices below this level are unsustainable and will not support new gas supply investment.Subscribe to gift this articleGift 5 articles to anyone you choose each month when you subscribe.Subscribe nowAlready a subscriber? Fetching latest articles
Gas reservation plan could give Australia the mother of all hangovers
The government’s proposed intervention risks delivering reduced supply, higher prices and import reliance – the very things the policy wants to avoid.
TL;DRAI
Australia's gas reservation scheme discourages new field investment as marginal costs ($12-13/GJ) exceed artificially depressed domestic prices. Data centers and IT operations face energy cost uncertainty, impacting infrastructure capex and operational sustainability planning in Australia.
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