NSW gas ‘most pressing issue’: Macfarlane

nswTIME is running out for NSW to deal with its looming gas supply crisis, Federal Industry minister Ian Macfarlane has warned.
Despite having vast reserves of onshore gas, NSW is heavily reliant on Victoria, South Australia and Queensland for its gas supplies.

Queensland and South Australian gas is set to be largely diverted to LNG export from next year, as a number of long-term supply contracts expire over the next four years.

Speaking at a Committee for Economic Development of Australia event this month, Mr Macfarlane said securing a long-term gas supply in NSW was one of the most pressing energy issues facing Australia and the state had to take control of its energy future by developing its own resources.

“The industry has social licence issues to resolve; however, the imposition of development moratoriums and ongoing regulatory change has created an environment where investment in resource development becomes all but impossible,” he said.

“It is difficult to understand this is happening in a state where most gas is imported, but large gas resources are available for development, and where demand is strong and increasing supply is the best way to combat rising prices.”

Mr Macfarlane compared the NSW situation to Queensland, where the domestic gas industry has thrived. “By developing its own domestic resources, NSW will be in a stronger position to ensure secure natural gas supplies in this State…however time is running short,” he said.

“The Commonwealth will continue to work constructively with NSW on this issue, but ultimately it is a matter that must be addressed by NSW.”

Mr Macfarlane welcomed a proposed gas pipeline linking the Northern Territory to the eastern gas market, but warned no government assistance would be forthcoming.

APA Group is undertaking a feasibility study into extending its NT gas network to the eastern markets, but costs for the project are estimated to be around the $1 billion mark.

“Any new supply is welcome in the eastern Australian market. Gas from the Top End could help alleviate potential shortages in NSW in the years ahead,” he said.

“However, any decision to proceed with a pipeline link will have to be founded on sound and robust commercial realities… this is in line with the Government’s policy that energy infrastructure be developed on commercial merit and independent of Government subsidies.”

Mr Macfarlane’s comments came as the Productivity Commission launched a research project into eastern gas markets ahead of first LNG exports next year.

The project will investigate the impact of linking the eastern states to the global gas market, the effects of economic regulation on transmission and pipelines and analyse costs and benefits of current exploration policies. The research paper will be released in March next year.