Turnbull blames Australian gas crisis on state restrictions

Australia, the world’s second-largest exporter of liquefied natural gas, needs to remove road blocks to gas exploration on the east coast that Prime Minister Malcolm Turnbull blames for a looming domestic supply crisis.

“We are facing an energy crisis in Australia because of this restriction of gas,” Turnbull told a business conference in Sydney on Thursday. “Gas reserves or gas resources are not the issue. The biggest problem at the moment is the political opposition from state governments to it being exploited.”

Turnbull will meet all the country’s major upstream producers in the the middle of the next week, according to his office. He will discuss how they can restart gas exploration despite restrictions from state governments.

Sydney-based AGL Energy Ltd., the nation’s largest energy retailer, walked away from gas exploration and production activities in February last year, citing commodity price volatility and long development lead times. It previously said state restrictions on exploration could affect earlier plans to spend about A$2 billion ($1.5 billion) on coal seam gas operations in New South Wales. The state of Victoria and the Northern Territory have a moratorium over onshore gas exploration.

Australia’s eastern states need additional energy to stave off an expected shortfall in gas-powered electricity generation in the 2018-19 southern hemisphere summer, according to the Australian Energy Market Operator. Gas producers have forecast an annual decline from 600 petajoules in 2017 to 478 petajoules in 2021, AEMO said.

Energy Debate

Origin Energy Ltd, Australia’s largest electricity company, on Tuesday said Queensland gas intended for LNG exports to Asia may be diverted to ease an expected supply shortfall this winter.

Royal Dutch Shell Plc, owner of the $20 billion Queensland Curtis LNG development, said in an emailed statement that its QGC Ltd. subsidiary will continue to make gas available “where we have the capacity to do so.”

Energy security has come under scrutiny since a state-wide blackout in September hit South Australia, the mainland state most reliant on renewable energy generation. Turnbull’s conservative leaning government called the state “utterly complacent” due to its over reliance on renewable energy following a partial blackout in February, whilst later attacking other left-leaning state governments for similar ambitions.

“Economics and engineering, they should be the two load stars of our national energy policy,” Turnbull said. “We’ve got to get the ideology and the politics out of it.”

On a per-capita basis, Australia is the largest user of wind and solar energy, and will be the global leader in LNG exports by 2020 while holding a third of the world’s uranium and “hundreds of years” worth of coal, Energy Minister Josh Frydenberg later told the conference.

Turnbull has previously flagged the possibility of subsidizing clean-coal power stations to help improve energy security and reduce consumer power bills. The response from industry has been muted. Two of Australia’s largest power companies, AGL and Energy Australia, have ruled out building new coal-fired capacity.

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