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Gas trading reforms won't solve supply shortages


Source: AFR, 14 Dec 2015

Large-scale gas users and pipeline operators have cautiously welcomed the draft reforms of natural gas trading arrangements in the eastern states, but pointed out they won't solve anything unless supplies into the market are increased.

The proposed reforms, presented to federal and state energy ministers at the COAG Energy Council in Canberra on Friday, would see two gas trading hubs set up in Queensland and Victoria, with transparent, simple reference prices.

Meanwhile, spare pipeline capacity would be compulsorily put up for auction with the aim of making it easier for gas producers and buyers to move gas around the grid if capacity is there.

The measures will be firmed after submissions are received from interested parties, in time for a final report to go before the Council of Australian Governments Energy Council in May.

Cheryl Cartwright, head of the Australian Pipelines and Gas Association, which represents major pipeline owners such as APA Group, said APGA members were comfortable with trying out new arrangements but pointed out that the fundamental problem of insufficient gas in the domestic market was not being addressed.