Oil and gas industry representatives from Australian Energy Producers (AEP) have called on the Federal Government to allocate new gas supply funding in the Federal Budget, in order to avoid projected gas shortfalls, in their 2024-25 Federal Budget submission.

The submission said that increased funding in gas exploration is needed to avoid forecast shortages, put downward pressure on prices and secure the economic and emissions reduction benefits of Australia’s natural gas resources.

AEP Chief Executive, Samantha McCulloch, said, “After more than a year of policy instability, government interventions and project approval delays, a recalibration of the policy and investment environment for natural gas is needed to secure our energy future.”

With no release of new acreage for petroleum exploration since August 2022, AEP has called for the release of new acreages to resume.

AEP said that price controls imposed on the east coast gas market in 2023 must not become a permanent fixture, and called on the government to outline a plan to return to market signals and incentivise new supply ahead of the scheduled 2025 review of the Code of Conduct.

It also said the government has also been urged to review the energy needs for critical minerals processing to ensure gas supply to power the manufacturing of the minerals required to get to net zero.

The 2024-25 Federal Budget submission highlights the important long-term role natural gas will play in Australia’s energy transition to net zero, as well as the growing opportunities for LNG exports to support regional emissions reductions.

“New gas supply is urgently needed from coast to coast to ensure reliable and affordable energy for homes and businesses,” Ms McCulloch said.

“We are calling on the Federal Government to work with gas producers, energy users and state governments on an Action Plan to bring on new supply to address near-term structural shortfalls.

“Whether it’s through streamlining environmental approvals or fixing the broken offshore regulatory system, Australia needs to move quickly to secure the economic, energy security and emissions reduction benefits of natural gas.

“The release of new offshore petroleum exploration acreage is long overdue and this annual process needs to get back on track to maintain our domestic and regional commitments.

“We have proposed the establishment of an Australian LNG Producer-Consumer Taskforce to strengthen regional relationships and ensure Australia benefits from a potential ten-fold growth in Asian LNG demand,” Ms McCulloch said.

The submission also calls for Australia to become a regional carbon capture, utilisation and storage (CCUS) hub – including developing a national roadmap and creating Net Zero Zones to fast-track emissions reductions.

“Carbon capture is part of the net zero pathway in a multitude of ways – such as lowering emissions from industries, unlocking low carbon hydrogen and supporting carbon removal,” Ms McCulloch said.

“It can also be a major economic driver for Australia through new jobs and investment.”

The recommendations include:

Ensuring reliable, affordable energy for Australia

  • Work with industry on an Action Plan to urgently bring on new gas supply to address near-term structural gas shortfalls in Eastern and Western Australia
  • Develop a Future Gas Strategy that recognises the critical, long-term role of gas in achieving net zero by 2050
  • Support exploration for natural gas and CCUS through acreage releases
  • Determine energy needs for future industries, including critical minerals processing

Restore investor confidence for new gas supply

  • Fix the regulatory uncertainty and delays for offshore gas projects
  • Streamline environmental approvals in the Environment Protection and Biodiversity Conservation Act reforms
  • Implement taxation and fiscal policy settings that support investment in new gas supply
  • Remove pricing controls and return to market signals for the east coast gas market to secure investment in new supply

Delivering Australia’s net zero transformation

  • Develop a CCUS roadmap to support the scale-up of CCUS technologies
  • Ensure the National Hydrogen Strategy recognises and incentivises hydrogen from natural gas with CCUS as part of Australia’s future low-carbon hydrogen mix
  • Support the creation of Net Zero Zones to reduce the costs and fast-track emissions reductions in hard-to-abate industries
  • Develop emissions policies that recognise the need for new gas supply to achieve net zero by 2050

Delivering on Australia’s commitment to remaining a reliable energy partner

  • Seize the LNG demand growth opportunity in our region
  • Establish an Australian LNG Producer-Consumer Taskforce
  • Advance Australia as a CCUS destination in the region
  • Recognise the role of Australian LNG in our trading partners’ decarbonisation plans

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