Looming gas shortage avoided as PM signs agreement

Gas exporters pledge to make up steep gas shortage.

Homes on Australia's east coast may have narrowly avoided spiralling gas prices due to a shortage after a deal was drafted between its largest gas exporters and the Prime Minister.

The in-principle agreement comes after months of tense negotiations, the looming threat of "almost unprecedented" government powers being used, and revelations the gas shortage was three times worse than originally estimated.

Prime Minister Malcolm Turnbull met with the heads of Shell, GLNG Operations and Australia Pacific LNG yesterday in Canberra to sign a deal that will see them make up 54 petajoules in 2018 and 48 petajoules in 2019, where a single petajoule would be enough to supply the residential needs of Penrith for a full year.

The deal is expected to slow the ongoing rise of gas prices and the resulting pressure the shortage would place on rising electricity bills – expenses which are a recognised strain for Australian households.

The Prime Minister praised the gas exporters as he signed the agreement for assuring the east coast won't face a gas shortage.

"I want to thank you for...the commitments you've given to ensure that the east coast gas market will be supplied so the domestic gas shortage about which we were so concerned will not arise.

"These commitments...ensure Australians have affordable and reliable energy. Gas being a more important fuel than ever in the generation of electricity."

Australia is currently the second-largest exporter of gas globally and is on track to become the largest by 2020. Negotiations to make sure the domestic market remained a priority were strained, says Zoe Yujnovich, the chair of Shell Australia.

"There have been some difficult and tense moments and we appreciate the challenge that you've given to us," she said in her address to the Prime Minister.

"We hope that...we can find a path forward to make sure that the domestic market is serviced and that indeed there is enough available gas for the market, which we stand behind and are committed to deliver."

Utility bills are presently placing strain on Australian households. A recent CHOICE survey found 82% of Australians identify electricity costs as the most burdensome expense in their households, followed by the expense of gas bills at 64%.

The federal government ordered an ACCC inquiry into the gas industry in April until 2020, with the competition watchdog expected to release interim reports on the industry every six months.

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