Big gas companies have cemented a promise Australia will not run short in the coming year after meeting with Malcolm Turnbull for the second time in a week.
Santos, Origin Energy and Shell on Tuesday signed an initial agreement, arrived at last week, to offer enough gas to the local market to cover an expected shortfall in 2018.
“I want to thank you very much for those commitments and by ensuring that there will not be a shortfall of gas next year, that means we will not be required to place restrictions on exports,” the prime minister said in Canberra.
Zoe Yujnovich, from Shell Australia, is hopeful gas giants and the federal government can forge a path forward on gas supply after a heated few months of debate.
“There have been some difficult and tense moments and we appreciate the challenge that you’ve given to us,” Ms Yujnovich said during the meeting at Parliament House.
“We hope that through the heads of agreement, 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.”
The government has received two expert reports warning the eastern states faces a shortfall of between 54 and 108 petajoules of gas in 2018.
One petajoule is enough to meet the needs of all the households in Warrnambool in Victoria, Wollongong or Penrith in NSW, or a large industrial user for a full year.
While more than enough gas is being extracted across the country to meet domestic needs, most of it is tied up in export contracts and some companies had planned to sell another portion on international markets.
Tuesday’s talks were expected to focus on how to cover the shortfall if it reaches more than 100PJ, which could happen if there’s a run of bad weather preventing renewables from generating as much power as projected, or if a coal-fired generator unexpectedly breaks down.
Ministers see the deal over exports as a short-term fix for rising gas prices and have also been pressuring the states – especially NSW and Victoria – to ease restrictions on gas development and exploration.
They have raised the prospect that states which have gas reserves but don’t exploit them could lose some of their share of the GST under a review of the tax’s distribution.