Senate Economics Legislation Committee [Part 2], , 3:05:49 to 3:09:52
Discussion on how the gas reservation framework and downward price pressure affect smaller domestic-focused producers and their future investment decisions.
Topics: Energy prices, Manufacturing
Speakers: Robert Jeremenko, Senator Susan McDonald, Paula Svarcas, Unknown Speaker
>> Thanks S. I'll jump in. Robert Jeremyo, Deputy Secretary Resources and Strategy. Uh so we have um had an extensive um amount of analysis and also modeling um and we have commissioned uh Asil Allen over the period that the departments have been working on this for the government uh as part of that and that has uh very much informed the um policy design including the 110%.
What analysis has the department done on how the over supply will impact smaller domestic focused producers particularly on their them making investment
decisions. So that that has uh definitely been one of the uh key policy aspects that we have been focused on to make sure that the um the slight over supply into the market. I take your point uh with your opening question but the 110% um is is balanced through as Miss Varcus uh pointed out the advice of the expert regulator and the AER uh over time to make sure that we get that balance correct such that it does provide that downward pressure on prices um ensures of course the supply of gas domestically but does so in a way that um that does not cruel the chances of of um domestic producers and I mean you know those producers who aren't currently exporting uh to continue to produce. So it's it is a very fine balance. Um the analysis we've undertaken has considered uh that as well and so uh the design of this policy is certainly not uh blind to uh all of those uh considerations.
What measures, if any, are in the framework to ensure that the over supply provision does not simply displace gas that domestic focus producers are trying to sell into the domestic market.
Well, there is a a concept of um additionality uh in the uh in the bills and that is particularly uh to ensure that um there there cannot in effect be um the cycling of of gas that would otherwise be put into the domestic market to um be used to satisfy a domestic supply obligation. So uh effectively um uh the gas that is put into the system uh by the domestic um by the gas reservation um scheme uh needs to be in addition to what um the regulator determines is the baseline of domestic production.
So if for example APLNG puts 120 pedigles of gas into the market domestic market each year and their requirement will obviously not be anywhere near that amount. They now don't have an opportunity to sell the excess of their domestic gas requirement to another exporter to allow them to use that for domestic supply as currently happens because that would offend the additionality provisions.
>> Not sure that's correct.
>> Well, explain to me how that's not correct.
>> Well, I'm I'm turning to my expert Senator so that we get you the right
>> Senator. The bill um the bills do provide for exporters to be able to do swaps as they do as they do now. So, that is that is part of the normal market behavior and it does not exclude the ability for exporters to do swaps um like just like they do now. That's that's not not correct.