‘No gas shortage’, says Santos boss

Santos chief executive Kevin Gallagher says Australia is not facing a gas shortage and has attacked government “distractions” and failure to support new development for high prices now threatening industry and household budgets.

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“Gas prices have increased because all the cheap gas has been developed, so it is costing more to get gas out of the ground,” Mr Gallagher told a business lunch in Sydney.

“This therefore is a pricing problem, not a gas shortage problem.”

Mr Gallagher’s comments came on the same day EnergyAustralia blamed gas exporters as one of the causes of hikes in electricity and gas prices that will take effect in 2017/18.

The Santos boss – whose company is a partner in the GLNG gas export plant in Queensland – said the Australian Energy Market Operator (AEMO) had confirmed that latest industry projections of domestic gas production were sufficient to meet expected gas demand.

As concerns grow that east coast manufacturers could run out of gas this winter unless the LNG industry is forced to divert gas exports to local users, Mr Gallagher said government intervention has distracted attention away from the underlying causes of the problem.

“We are being asked to believe that high prices and shortages in supply are the fault of the LNG exporters whilst at the same time state and territory governments have either banned or restricted gas exploration and production,” Mr Gallagher told the American Chamber of Commerce lunch in Sydney.

“Unfortunately the politics of the situation have now taken over.”

Mr Gallagher blamed “the failure by previous governments at all levels” to encourage the development of a steady gas supply.

On Thursday EnergyAustralia announced electricity costs for NSW households will rise by 19.6 per cent in 2017/18, while gas prices will rise 6.6 per cent.

Energy Australia chief customer officer, Kim Clarke cited higher wholesale costs caused by the closure of coal-fired power stations and increased demand for gas by LNG projects in Queensland as factors in the price rises.

Despite NSW importing 95 per cent of its gas, Mr Gallagher said politicians were reluctant to challenge the negative perception of coal seam gas and fracking and the role they could play in Australia’s energy security.

He called the situation a “national issue” requiring government to collaborate over a National Energy Plan.

Mr Gallagher said a record 23,000 public submissions were made to the NSW Planning Department for the company’s proposed $3 billion coal seam gas project in Narrabri.

Despite scientific research “consistently proving” that regulated fracking and CSG development is safe, Mr Gallagher said activism against gas development was strong in Australia and politicians would not expose themselves by association.

Santos has spent nearly a decade and over a billion dollars trying to get its controversial Narrabri Gas Project over the line, he said.

“Had Santos been able to develop this project in a suitable timeframe, we would not be talking about an east coast gas crisis today,” he said.