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Domestic gas market shows short-term relief for some, but far from resolved - 13 December 2017

Domestic gas market shows short-term relief for some, but far from resolved

 

Chemistry Australia CEO Samantha Read has said that the findings of today’s Australian Competition and Consumer Commission’s Interim Gas Inquiry Report, underscore the ongoing need for a coordinated government response to support a competitive domestic gas market and strong manufacturing sector.

“Federal Government intervention has helped increase some levels of domestic supply. Importantly, the ACCC Inquiry is now providing the evidence needed for the market to become more competitive,” said Ms Read. However, the ACCC also notes the east coast market is still not functioning effectively and the lack of supply from the southern States, as well as transportation issues, continue to create a tight market, impacting major commercial and industrial users.

“The report notes that prices are still higher than would be expected in a well-functioning market. Gas users in the southern States are increasingly reliant on Queensland gas, which adds between $2 to $4 per gigajoule. For large users, this represents millions of dollars of input costs and puts jobs at risk,” Ms Read said.

The chemistry industry uses gas, not only for energy, but as a feedstock to manufacture important products that are critical to the national economy. This includes fertilisers for our crops, cleaning products for health and hygiene in our homes and hospitals, and smart packaging to keep our food fresher for longer. Chemistry Australia members continue to experience challenged gas pricing, limited offers and difficult contract terms.

“The ACCC Inquiry shows that while some users have seen a level of short-term supply relief in the east coast market, the long-term issues are far from resolved. The gas crisis is still here,” said Ms Read.

“It is particularly concerning that retailers appear to be placing less importance on commercial and industrial users. In the end, it’s about the jobs and value that these businesses create throughout the economy.

“The Inquiry Report also notes the consequences of onshore gas exploration restrictions. Meanwhile, the release today of the draft Final Report of the Scientific Inquiry into Hydraulic Fracturing in the Northern Territory (the Pepper Report) concludes that the challenges and risks associated with any onshore gas industry in the NT are manageable.

“We continue to call on all States to replace moratoria with responsible and informed case-by-case gas strategies, as recommended by the ACCC, supporting communities, jobs, investment and economic resilience.

“We reiterate our call for a coordinated approach by all governments to ensure Australian manufacturing has access to competitive domestic gas and energy markets,” said Ms Read.

 

Gas is particularly essential to the business of chemistry. It’s important for process energy, and it is also a non-substitutable ingredient for advanced manufacturing. The Australian chemistry industry uses 10% of Australia’s domestic gas for its molecular properties to create a huge range of products essential to our everyday lives. These include fertilisers for our crops, cleaning products for health and hygiene in our homes and hospitals, and smart packaging to keep our food fresher for longer.

 

Media contacts:
Claire Selby – cselby@chemistryaustralia.org.au or 0448 028 876
Krista Imberger – kimberger@chemistryaustralia.org.au or 0439 318 290

 

Chemistry Australia is the pre-eminent national body representing the $40 billion Australian chemistry industry, one of the largest manufacturing sectors in the country. The industry employs more than 60,000 people and contributes more than $11.6 billion to GDP in industry value add. Members of Chemistry Australia are positioned across the entire value chain including manufacturers, importers and distributors, logistics and supply chain partners, raw material suppliers, fabricators, compounders, recyclers, research, academia and service providers to the industry. These businesses range from small family-owned companies to leading national and multinational enterprises.

 

 

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