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Client Update: Budget measures to increase gas supply

10 May 2017

In brief: The 2017 Federal Budget introduced several measures designed to increase domestic gas supply to the Australian market. Key measures include the direct financing of onshore gas development and studies into potential programs aimed at increasing the efficiency, transparency and security of the gas market. However, the effectiveness of this funding package depends on whether state and territory governments will continue to impose regulatory constraints on the exploration and production of onshore gas. Partner Igor Bogdanich (view CV) and Law Graduate Maddy Foote report.

What does the package include?

  • $28.7 million over four years from 2017-18 to encourage onshore gas developments for the domestic market.
  • $30.4 million over four years from 2017-18 for a Bioregional Assessments program into the potential environmental impacts of three prospective onshore unconventional gas projects.
  • $7.6 million in 2017-18 for a series of studies into:
    • the feasibility of potential pipelines from the Northern Territory and Western Australia to South Australia;
    • improvements to the National Gas Services Bulletin Board undertaken by the Australian Energy Market Operator;
    • the constraints on increased gas supply on the east coast of Australia; and
    • current and potential offshore gas production in South Eastern Australia.

Background


The $86.3 million gas supply package comes in the wake of increasing concerns over domestic gas supply on the east coast of Australia. It follows the introduction of regulatory restrictions on onshore gas development by a number of states and territories. Both Tasmania and the Northern Territory have instituted bans on fracking and unconventional gas exploration. Earlier this year, the Victorian Government introduced a permanent ban on all onshore unconventional gas exploration and development. For more information on the Victorian anti-fracking legislation, please see our Client Update: Victoria to ban fracking.

Federal Resources Minister Senator Matt Canavan stated that the funding allocation under the Budget is subject to the removal of these regulatory barriers. To this end, Federal Environment and Energy Minister Josh Frydenberg has called on states to continue to work with the Federal Government to overcome regulatory barriers and inconsistent policies to accelerate onshore gas development in Australia.

Other relevant Budget measures

The Federal Budget energy package also includes:

  • $19.6 million over four years from 2017-18 to the Gas Market Reform group to accelerate reforms to improve gas market efficiency and transparency.
  • $13.4 million over five years from 2017-18 for CSIRO to complete its online Energy Use Data Model to allow improved market forecasting and research outcomes.

Conclusion

These budget measures signal that the Federal Government wishes to pursue policies that it considers will foster the exploration and production of onshore gas in Australia.

It remains to be seen how state and territory governments will respond to this signal.

 

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