Lift gas moratoriums, Morrison urges states

Treasurer Scott Morrison has put more pressure on states to lift their gas bans.

It comes on the back of new reports forecasting a gas shortage three times larger than originally predicted.

Speaking in Canberra on Tuesday, Mr Morrison said while the gas industry is working towards ensuring a domestic supply, "the even better outcome is the moratoriums on both conventional and indeed unconventional [gas], where it is appropriate, can be lifted".

He outlined the impact it will have on Australian business, and the need to "remove the artificial constraints on gas supply in this country, particularly in the south, in New South Wales and in Victoria".

Manufacturers on Monday stated that the forecast shortage would cripple the industry, and urgent change was needed.

"We are walking around on top of the gas in New South Wales and Victoria that our economy needs, that the jobs that depend on that gas need, and it is important that this be freed up," Mr Morrison said.

"All of those who barrack for the moratoriums need to take some accountability that those moratoriums are denying businesses and industry the gas they need to function.

"That is something that needs to change. In the short term, we will deal with this problem with the industry but in the long term, we have to solve the real problem and that is the supply of gas."

Mr Morrison also slammed the southern states' reliance on Queensland gas reserves.

"The answer is not to draw the gas down from the north where it is also needed to support industry. New South Wales and Victoria has to carry its own weight when it comes to gas supplies and it is not doing it at the moment," he said.

However, he remained cautious on the implementation of a legislated domestic reservation policy.

"[We] are making the right call to be very cautious about implementing these other export controls," Mr Morrison said.

NSW Energy Minister Don Harwin on Monday rejected claims the state has halted gas exploration and production.

"There has never been a moratorium on onshore gas development in NSW," Mr Harwin told Fairfax Media.

"We have a gas plan with science-based regulation of the gas industry. In June we implemented the Strategic Release Framework, which identified new areas for gas exploration.

"The Strategic Release Advisory Body, led by our state's Chief Scientist Mary O'Kane, is evaluating two prospective conventional gas troughs in western NSW. The Narrabri Gas Project is currently under consideration in the NSW Planning system."

A Victorian government spokesman agreed on the need for domestic reservations.

"The Andrews Labor government has long advocated for this - Australian gas should be reserved for Australian households and Australian businesses," the spokesman said.

He blamed the shortage on the fact "Australia exports two-thirds of our supply overseas".

The Victorian government stated that its existing onshore conventional gas moratorium is giving it more time to implement a gas program to gain a deeper insight into the state's reserves.

However, the Australian Petroleum Production and Exploration Association said even if these moratoriums were lifted today, their impact would not be immediately felt.

"There is some production that could be brought on reasonably quickly but not sure if it would make a difference in 2018," APPEA chief executive Malcolm Roberts said.

"It's important to note, however, that supply concerns extend beyond next year. As the Australian Energy Market Operator, the Australian Competition and Consumer Commission, and the earlier Finkel Review have all reported, the sustainable solution is more gas and more suppliers," he said.

"Removing bans and moratoriums and considering projects on their merits would help achieve that.

"APPEA and others have been warning about this challenge for more than five years. Action taken earlier would have ensured a supply shortfall never arose."

While Origin, AGL, and Shell have voiced their support for ensuring domestic supply, not all Australian gas suppliers are behind the implementation of a reservation mechanism.

INPEX , which operates the $34 billion Ichthys LNG operation in Western Australia - and is therefore outside of the National Electricity Market - said the gas trigger has the potential to harm foreign investment.

"INPEX believes that the gas export controls announced by the Australian government have the potential to deter future investment and to detract from Australia's international reputation as a reliable supplier of LNG," INPEX spokesman Bill Townsend said.

However, it did support the government's move to lift state gas moratoriums.

"INPEX encourages regulatory reform to remove restrictions on gas exploration and development and to attract the additional investment required to enhance the country's energy security."

This story Lift gas moratoriums, Morrison urges states first appeared on The Sydney Morning Herald.