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The nation’s biggest Japanese investor, energy giant Inpex, has called on the Albanese government to avoid triggering unprecedented gas export controls to head off domestic shortfalls, warning it will harm Australia’s appeal as an investment destination.
Inpex president Takayuki Ueda told a function in Canberra on Thursday that the government’s decision to intervene in the east coast gas market in December – setting temporary price caps to tame soaring prices – risked making matters worse by stalling investment in future supplies that may be vital to keeping energy affordable and secure in coming years.
The Albanese government has faced mounting pressure to intervene in the gas market and lower energy prices.Credit:AP
“We are concerned that market intervention will only compound the situation,” Ueda said. “Price intervention is likely to discourage investment in exploration and production while simultaneously driving up demand.”
Inpex – operator of the multibillion-dollar Ichthys gas field 220 kilometres from West Australia’s coast and a key supplier of liquefied natural gas (LNG) to Japan – also sounded alarm about the prospect of the government enacting a policy mechanism that could redirect LNG destined for exports to local buyers to avert the threat of domestic shortages.
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Described by the government as a measure of last resort, the Australian Domestic Gas Security Mechanism (ADGSM), known as the gas trigger, empowers Federal Resources Minister Madeleine King to redirect exports into the local market.
However, that would mean disrupting crucial energy supplies to Australia’s largest energy customers, Japan, China, Singapore and Korea, which are also the nation’s major trade and defence partners.
The federal government is due to make a call by April 1 to initiate the first stage of the gas trigger, which has never been enacted before.
As gas fields in the Bass Strait, which have traditionally supplied the bulk of east coast gas demand, rapidly dry up, the Australian Energy Market Operator (AEMO) last week warned there would be a risk of shortfalls across the nation’s south-east on days of peak winter demand until 2026. By 2027, states including Victoria, NSW and South Australia would face yearly gas supply deficits unless new gas supplies were made available, it said.