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Plea for solutions to Australia's gas 'crisis'

Initiative for state and federal governments to work with producers to increase supply in east

The spectre of near-term domestic natural gas shortages in eastern Australia has led to an initiative for state and federal governments to work with producers to boost supply.

The state government in Queensland has urged the federal government to support a package of solutions, including new onshore gas pipelines and a joint study into infrastructure options, to tackle the gas shortage which Prime Minister Malcolm Turnbull recently referred to as a "crisis".

Queensland's Natural Resources Minister Anthony Lynham has offered the state's gas resources for federal support. “Urgent action is required to increase domestic gas supply to protect industry and to secure jobs,” said Lynham.

Queensland has already opened up acreage for gas exploration that will be reserved for sale in Australia only.

“There is a lot more that can be done, and we believe those actions should be funded by the Commonwealth in the national interest,” he added.

Australia's national upstream association APPEA was supportive of the new ideas.

"The first, best solution is private investment in competitively-priced infrastructure," said APPEA. "However, if the market fails, Lynham's call for the Commonwealth to support infrastructure has merit and is worth considering."

Four of the eastern states — New South Wales, Victoria, Northern Territory and Tasmania — have either permanent or medium-term bans on most onshore oil and gas activity following campaigns by environmentalists about health, safety and environmental dangers.

In addition, Queensland's three LNG projects are drawing on huge volumes of gas, leaving little supply for the large eastern domestic market.

Earlier this month, Shell unveiled two new gas sales agreements with large domestic customers in the eastern states, and in doing so reduced its LNG export volumes from the Queensland Curtis LNG project during 2017.

Shell Australia's chairman Zoe Yujnovich said Shell had long held the view that community acceptance of an LNG export industry depended on a reliable supply of gas to Australian customers, including factories and homes.

“Make no mistake, the business I lead is pursuing further domestic supply agreements — and has taken proactive steps to supply the east coast gas market,” she said.