The Australian federal government has ruled out domestic gas reservation
as part of its response to a report by Prime Minister Julia Gillard's
Manufacturing Taskforce, a decision which has dismayed the major local gas
"Manufacturing can prosper and grow in Australia if the sector takes
advantage of emerging opportunities in the Asian region," according to the
taskforce, which represents business, unions and the research sector. The
taskforce Thursday presented its report, dubbed Smarter Manufacturing for a
The Australian manufacturing sector currently faces challenges such as
the high Australian dollar, the strength of the resources boom in terms of
capital and labor, more intensive global and regional competition, and the
continuing fallout from the global financial crisis, the taskforce reported.
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It made more than 40 recommendations aimed at strengthening local
companies as they adapt to global economic change.
"The government is supportive in principle of most of the report's
recommendations," Gillard said in a statement. "However, the government does
not support recommendations in the report to further investigate a sovereign
wealth fund and a domestic reservation policy for gas."
According to Gillard, the Australian economy is strong, with solid
growth, low unemployment, contained inflation and a record pipeline of
investment. A big chunk of that investment is more than A$175 billion ($183.5
billion) worth of LNG projects around the country.
The emergence of a major coalseam gas-based LNG industry in the state of
Queensland has prompted increasing calls by consumers for a domestic gas
reservation policy in the nation's eastern market over recent months,
although the clamor has been ignored by Canberra. The state of Western
Australia, which hosts two producing and two developing conventional LNG
projects, already has a 15% gas reservation policy in place.
In May, a report into the coalseam gas industry released by a
parliamentary committee in the eastern state of New South Wales called, among
35 recommendations, for a domestic reservation policy. Coalseam gas
development in New South Wales is currently stalled while the state
government nuts out the details of its policy on the industry.
"Australia is the only country in the world where international oil
companies can openly access and export gas without prioritizing the local
economy," said Tony Petersen, chairman of the DomGas Alliance gas consumers'
lobby group. "It is also the only major gas producing country facing serious
shortages and sharply rising prices."
According to the Domgas Alliance, domestic gas prices have risen to as
high as A$10/gigajoule in the eastern state of Queensland and around
A$8-12/Gj in Western Australia, despite a massive expansion in gas production.
"This compares to around $2.60/Gj in the United States and just over $2
in Canada. Both the United States and Canada have policies that prioritize
supply to local industry and households over gas exports," the group added.
"Most of Australia's gas resources are now controlled by a handful of
very large international oil companies with multi-billion dollar LNG
contracts to fulfill," Petersen said. "Selling to local Australian companies
is not in their business model so will not happen voluntarily."
--Christine Forster, email@example.com
--Edited by Jonathan Dart, firstname.lastname@example.org