Retrospective domestic gas reservation policies were ruled out but increased regulation and prospective gas reservation were both raised during CEDA’s State of the Nation 2013 energy options and security discussion.
Retrospective domestic gas reservation policies were ruled out
but increased regulation and prospective gas reservation were both
raised during CEDA's State of the Nation 2013 energy
options and security discussion.
Both the Minister for Resources and Energy, Gary Gray AO, and
Shadow Minister for Energy and Resources, Ian Macfarlane, ruled out
retrospective gas reservation policies.
However, Mr Macfarlane said the Coalition would consider a
prospective policy for new projects.
"While the Coalition is clearly opposed to a mandatory blanket
gas reservation policy, we are open to investigating alternative
ideas," he said.
"Instead of a gas reservation policy applied retrospectively to
existing projects it would be far more effective and less
destructive to the industry - let alone the sovereign risk profile
- to promote the idea of acreage reservation prospectively for
domestic gas production (from) new projects where by certain areas
are set aside wholly or in part for the extraction of gas for the
"Under such a policy investors on both sides would know exactly
where they stand and obviously it wouldn't apply to existing
Mr Gray said the Australian Government did not agree that a
domestic gas reservation would keep gas prices down.
"In keeping with our belief in open and competitive markets, the
Australian Government does not agree that domestic gas reservation
would keep gas prices down, or put more gas in the market," he
"In our view it would create uncertainty and deter investment in
new gas supply."
However, he said that "without adequate access to gas for
domestic users, governments will face increasing pressure to use
the stick of regulation".
The cost of doing business in Australia and productivity was
another key issue discussed, with Shell Australia incoming Country
Chair Andrew Smith saying high costs pose a direct risk to the
current pipeline of investment.
"We expect Australia to underpin the next phase of growth for
our LNG portfolio," he said.
"This investment will generate considerable employment, national
income and tax revenue.
"But while Australian has potential of 100 million tonnes per
annum of proposed projects in development, a range of challenges
including high infrastructure and labour costs and environmental
constraints pose direct risks to the pipeline of this
"With seven LNG projects currently in construction, we have
become the highest cost nation to build the next LNG plant, in fact
we are now 20 to 30 per cent more expensive than the United States
"Competing demand for our workforce means we are paying people
as young as 20 around $200,000 a year. Their bosses can be as young
as 25 and get paid even more.
"We worry about how sustainable this is, how much longer can we
afford to do this and can we afford to miss the window of
opportunity Australia has for constructing new projects?
"How much time do we have before our competitors in North
America and East Africa catch up and start stealing our
Mr Smith said we need to recognise that we may need help
building these projects and skilled migration will be
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from the 2013 State of the Nation