The Australian Competition & Consumer Commission (ACCC) says the high cost of gas has become a threat to Australia's east coast manufacturers.
In his speech to the Australian Domestic Gas Outlook conference in Sydney, ACCC chair Rod Sims called on gas suppliers to “consider how they can help avoid driving manufacturers and other domestic gas users out of the market”.
The ACCC chair said producers must accelerate investment in gas exploration and development with the governments, in turn, allowing access to gas resources and encourage development of gas infrastructure.
Citing the risk of making Australian manufacturers internationally uncompetitive and increasing the likelihood they will wind up or relocate their operations, Sims said gas suppliers would be advised to consider what they can do to provide immediate price relief to the manufacturing sector.
“To avert the current crisis, these actions were required a number of years ago,” Sims said. “What is puzzling is why we are not seeing more investment in new gas supplies now.”
Sims said governments must also actively monitor gas producers’ compliance with their licence requirements, and ensure large gas producer do not withhold gas from development and production to suit their own commercial priorities.
“The east coast of Australia is just about the only region in the world that has both gas exports and a liberalised gas market,” Sims told the conference.
Sims mentioned that RemaPak, a producer of polystyrene coffee cups in Sydney, recently went into administration citing high gas prices and this closure followed Coogee Chemicals shutting its Laverton plant in 2016.
“Many others are on the verge of making critical investment decisions and if they chose to relocate or exit, they will not come back,” Sims said.
During the course of its recent gas inquiry, the ACCC has worked to promote transparency, monitor progress of reforms and report on the operation of the gas market.