For producers, the gas price cap means “a minefield of uncertainty”.

An industry source, who knew the views of LNG producers and was wary of publicly criticizing the government, said the fact that gas deals would be assessed on a case-by-case basis increased the risk that producers could be fined in tens of millions of dollars for supply contracts they believed would comply with the new rules.


“This makes it difficult for manufacturers to know exactly what might constitute compliance or non-compliance until they get the fine in the mail,” the insider said.

Woodside and ExxonMobil, the Queensland LNG producer and Bass Strait gas field operator, said they would review the guidelines before making decisions on future domestic sales agreements.

Woodside, Australia’s largest gas producer, said it has already finalized its domestic sales contracts for this year but will review ACCC guidelines and await the final draft of the new mandatory industry code of conduct before finalizing contracts for 2024.


“Woodside remains in discussions with buyers for purchase agreements for 2024 and beyond, which should close in late 2022,” a company spokesman said.

The impasse between the companies and the government is being further pressured by September’s heads of agreement, in which the gas companies pledged to offer the domestic market 157 petajoules of new gas supply, a quarter of the market’s annual demand. in the next 12 months. The government can also enact gas trigger legislation under the Australian Domestic Gas Supply Mechanism, allowing it to force companies to divert their lucrative LNG export shipments to Australian markets.

A spokeswoman for acting Resources Secretary Catherine King said the government expects producers to honor their existing commitment under the agreement and deliver the 157 petajoules of uncommitted gas to the domestic market in 2023.

“The ACCC stands ready to exercise its enforcement powers if it becomes aware of price cap violations — particularly if it becomes aware of behavior designed to circumvent the price cap,” the spokesman said.

Climate Change and Energy Secretary Chris Bowen said on Wednesday that while producers deserved a chance to assess the guidance, he warned he was ready to enforce the gas trigger.

“The Government’s strong and clear expectation and requirement of gas companies is that they will supply gas to Australian consumers at a reasonable price… we will act and do whatever we need to do in the national interest,” he said.

Break through the noise of federal politics with news, perspective and expert analysis from Jacqueline Maley. Subscribers can sign up for our weekly Inside Politics newsletter here. For producers, the gas price cap means “a minefield of uncertainty”.

Callan Tansill

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