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Australia pays more for its own gas than it charges customers overseas

April 16, 2021

The Australian Workers’ Union says proposed changes to offshore petroleum and gas storage legislation highlight the fact that the nation’s vast gas supplies are now largely foreign-owned.

The AWU says the Australian Competition and Consumer Commission has also effectively approved cartel conduct by some of the world’s largest gas companies, resulting in our gas going overseas while Australian consumers miss out and prices rise.

“Australians find themselves paying more for our own gas than we charge our customers overseas. It’s crazy!” AWU National Secretary Dan Walton says.

“We are the world’s richest energy exporting nation but have utterly failed at providing affordable energy prices at home.

“Australia used to be a manufacturing powerhouse but as energy prices began to rocket, our manufacturing industry began to contract and many of our remaining industries are now struggling to survive.

“Shoring up our gas supply and delivering affordable energy would not only preserve these under-threat jobs, it would lead to a manufacturing renaissance with many more highly skilled and highly paid jobs across the country.”

The proposed Offshore Petroleum and Greenhouse Gas Storage Amendment (Benefit to Australia) Bill 2020 would amend the Act to ensure “that the exploitation of these natural resources is for the benefit of the Australian community”.

In a submission to a Senate inquiry into the Bill, the AWU says proposed changes are welcome but the changes are unlikely to ensure Australia’s significant oil and gas deposits are used for Australia’s benefits.

“In particular, it is unlikely to change the way that the National Offshore Petroleum Titles Administrator applies the Act. It would be free to interpret the change to mean exports are ‘beneficial’ to the Australian community, leaving the dangerous status quo in place,” Mr Walton says.

“But the proposed Bill has started a much-needed conversation about how Australia’s oil and gas deposits should be used to benefit Australians.”

In the submission Mr Walton points out the AWU maintains industrial coverage across all aspects of the oil and gas supply chain, and has significant coverage and membership across heavy industrial manufacturing, where baseload electricity power remains one of the largest input costs.

“From offshore oil and gas, to every oil refinery, as well as Australia’s steel and aluminium works where gas is a crucial input, the AWU’s members rely on Australia’s oil and gas supplies,” Mr Walton says..

“This includes the milling and export of Australian steel, aluminium, chemicals, fertilisers, fuel refining, and building materials manufacture.

“Unfortunately, these gas supplies are now largely foreign-owned and are not used to benefit Australia and its workers.”

The AWU has previously fought for greater protections of Australia’s fuel security, contributing to the Federal Government’s recently announced measures to increase domestic fuel reserves.

In its submission the AWU recommends that the Government:

• Institutes a “lose-it-or-lose-it” approach to retention leases, to avoid warehousing of offshore petroleum licences.
• Revises the Australian Domestic Gas Security Mechanism to include a price trigger so the domestic gas price does not exceed the export price.
• Immediately institutes a gas export regime that controls for prospective gas reservation, ahead of working on a broader solution alongside state governments.
• Pursues pipeline regulation reform and develops the Australian Gas Hub (as promised in its gas-fired recovery policy proposal in September).
• Works with the ACCC to improve competition and transparency for domestic gas contracts and to reduce approved cartel conduct in gas joint marketing ventures.

Read the full submission here.

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