The Government’s Gas Reservation Policy is nothing short of a betrayal. They claim it will put downward pressure on gas and electricity prices. It won’t. But the gas cartel and foreign governments will be happy. Rex Patrick reports.
Putting Out the Trash
The media release heading was “Affordable gas for Australian homes and businesses”. I’ll show that to be a lie to the Australian public.
The media release issued by Energy Minister Chris Bowen and Resources Minister Madeleine King on the results of a Gas Market Review announced that the Government plans to impose a domestic gas reservation requirement on producers of between 15 and 25% of extracted gas, but only for new contracts.
It was a weak announcement, buried by the ongoing news reporting on the awful events that took place in Bondi and made on the windward side of Christmas.
The Government was no doubt happy with the muted media reporting. They know what they are doing. They know their new policy, arrived at after much tortured and secretive deliberation, is a betrayal of both the environment and Australian consumers.
There will be new gas
Inherent in the announcement is an intention for there to be new gas.
There can be no impact on prices at at all in their gas reservation policy unless there are new approvals. At several places in the new Gas Market Review Report it specifically states that the Government’s new policies seeks to provide “regulatory certainty” as a means of encouraging investment in new supply.
The Government’s message is, in effect – if you want lower electricity prices, we’re going to have to ‘drill baby drill’. (Apologies for referencing Donald Trump’s cheap sloganeering, but that’s where our government is contemplating going.)
The International Energy Agency forcefully states that the pathway to net zero by 2050 is a very narrow one and requires that no new oil and gas fields get approved. The Government is ignoring that.
Prime Minister Albanese and his ministers spruik ‘net-zero’, but are not serious about it. At least the Coalition are upfront about their policy.
In the 104 page Report the word ‘climate’ is found just 18 times – but mostly as part of proper nouns like ‘Department of Climate Change, Energy, the Environment and Water’ and ‘Minister for Climate Change and Energy’, once in the context of ‘investment climate’ and once in the context of motherhood statement on ‘climate change’.
No effect on Australian energy prices
The ministers have advanced the idea that the new policy will put downward pressure on gas and electricity prices (gas sets the electricity price).
They say the policy will “shield Australians from surging international gas prices”.
But that is a political lie.
The reservation scheme only starts in 2027. That means nothing will change in the next 18 months.
And even when the scheme does kick in it will do very little. No retrospectivity means that there will be a 0% domestic reserve on massive amounts of existing gas and a 15-25% reserve on tiny amounts of new gas.
The basis for this approach was contained in both the joint ministerial release and the Gas Market Review report. ‘Existing contracts would be respected – both domestic and international contracts.
These are commercial contracts. The Government knows that Australians are hurting, they know business is hurting, but they don’t want to disturb commercial arrangements between companies.
Governments around the world change policies all of the time. They are not bound by arrangements between commercial entities. MWM has already debunked the gas cartel’s ‘sovereign risk’ claims.
‘Valley of death’ or mountain of spin? Gas reservation must be retrospective to cut power bills
Stakeholder grins
And so, the gas cartel members are left grinning like the Cheshire Cat.
It’s no change for them. They get to charge foreign customers high prices, charge Australians a motza too, transfer their profits offshore to minimise their tax and pay no royalties (PRRT was even more pathetic in the recent MYEFO). And the Government is content in letting them do that.
The Albanese Government has put commercial interests, and it’s mainly foreign commercial interests, before our national interest.
As much as there would be comfort in just blaming commercial influence over Government, it’s not that simple.
There are bigger forces at play.
Foreign nations grin
It’s not just the cartel. Foreign governments are putting even more pressure on to leave Australian gas exports undisturbed. They are grinning too.
Take Japan. Japan has just 11% domestic energy production as a percentage of total energy consumption. In calendar year 2022, Australia supplied 43 percent of Japan’s Liquid Natural Gas (LNG). Unsurprisingly, Japan is the leading investor in Australia’s LNG export industry.
- INPEX is a key production and export industry player here in Australia. It has a 67% participating interest in the Ichthys LNG project which accounts for 10% of Japan’s LNG imports. INPEX also has an interest in Darwin LNG, Coniston and Van Gogh, Prelude FLNG and Ravensworth.
- JERA is another big player in Australia. It has an interest in Ichthys, Wheatstone, Gorgon, Barossa, Scarborough and Darwin LNG Project.
- Japan Australia LNG, has equity interests in three LNG projects in Western Australia; the recently expanded North West Shelf, Wheatstone and the Browse project (under development).
- Osaka Gas Australia has an interest in Sunrise (under development), Ichthys and Gorgon.
The Japanese Government partly owns INPEX and provides financial backing and policy support for the others.
A similar story exists for the South Koreans, who have only 19% domestic energy production as a percentage of total energy consumption. Only the company names change – for example Korea Gas Corporation, with an interest in Prelude, Gorgon and Ichthys.
When advocacy occurs, it’s not just the commercial cartel. The Japanese and South Korean governments are doing the same, but with ‘diplomacy’ being used to replace the word ‘lobbying’.
And our current government, like its predecessors, has an entrenched colonial mindset; is always anxious to avoid even a hint of criticism from the foreign corporations, governments and countries our economy is set up to serve.
The real (t)reason
| Treason (noun) – the crime of betraying one’s country. |
Past Freedom of Information (FOI) requests and fights relating to gas have revealed exactly what’s been going on.
In late 2023 a senior DFAT official deposed an affidavit to the Administrative Appeal Tribunal, in the context of proceedings related to a gas reservation policy, that Australia needed to maintain its position as a reliable and stable supplier of north Asia’s energy.
DFAT evidence on supporting gas reservation policy secrecy (Source: AAT Affidavit)
The sensitivities were such that the Administrative Appeal Tribunal refused to release an analysis of options to lower the price of gas for Australians. DFAT was worried details on what was being considered by the Australian Government would shake the confidence of Japan and South Korea.
Minister after minister has spent time with the Japanese and South Koreans assuring them that we won’t let them down.
Minister King’s address to the Australia-Japan Joint Business Conference in Nagoya, Japan, reassured Japanese families and businesses that the Albanese Government was there for them.
Importantly, Australian LNG helps provide power to tens-of-millions of Japanese families and businesses across Japan.
It truly is a remarkable part of our shared story that a country of 26 million people is able to support the energy needs of a country of 124 million, the third largest economy in the world.
Australia understands that Japan depends on reliable, secure and affordable energy imports.
This will continue into the future.
We will not let Japan down.
Minister Madeleine King – “We will not let Japan down” (Source: DFAT)
DFAT post conference report also detailed the Minister’s commitments to Japan.
DFAT’s report on Minister King’s October 2024 visit to Japan (Source: FOI)
Further messaging on Australia. Being a reliable supplier was contained in the newly released Report.
There is no restriction or upper limit on the amount of gas that can be exported as LNG exporters will have the discretion to invest in and produce gas for export provided that domestic supply obligations are satisfied.
Happy days for Japan and Korea!
Climate Betrayal: how backroom deals with Japan locked Australia in for decades of gas
Departmental flip-flop
The recent report reveals the sycophantic nature of senior government officials dealing with gas.
A 2021 report on a gas reservation policy provided to the Morrison Government made it clear that officials viewed a gas reservation scheme as a bad thing.
2021 Report (Source: FOI)
But with political pressure on the Government to do something their advice has changed. Gas reservation is now OK, provided it takes the most minimal steps to reduce export gas.
2025 Report (Source: Public Gas Market Review Report)
Sell out
The newly announce gas policy is, in summary, a big win for the gas cartel and a big win for gas users in Japan and South Korea. But it’s a massive loss for Australian consumers and Aussie manufacturing companies.
Putting out the policy earlier this week was successful for the Government, with little or no attention being given to the announcement. Most of the mainstream media has reported the announcement as a policy win, when in truth, it’s a treasonous betrayal.