Watch out New South Wales, you’ve made dad mad.
Federal industry minister, Ian Macfarlane, is “cranky” with the glacial pace of gas resource development in NSW and he’s not holding back with how displeased he is.
With limited new production coming online the state’s energy prices will continue to climb, impacting high energy users, including manufacturing and mining, Macfarlane said.
“In the end, as a federal minister and someone who loves all his children, I can’t just sit there with my hands in my pocket and watch one of my children drown,” he said.
“I’ve got to go in and fix their problem. I don’t like doing it. I’m pretty cranky about doing it. The reality is I’ve got to do it. We can’t just let thousands of jobs go in manufacturing in NSW just because the state government hasn’t done the obvious thing to do.”
The Australian’s David Crowe today reports the Abbott government sees “flooding the market” with new gas supplies as one way to plug the impending energy shortage hanging over the east coast’s head.
Gas shortages have been flagged for NSW, which currently only produces about 5% of its own gas, as early as 2016. With growing international demand NSW will probably be forced to pay market-based prices for Australian gas if users want reliable supplies.
Macfarlane is negotiating deals to fix gas shortages but said redirecting gas bound for export to the domestic market isn’t the answer as it doesn’t promote new project development.
“The solution to high gas prices is to flood the market with gas,” Macfarlane said.
Last month Macfarlane flagged one of the solutions to the east coast’s gas shortage issues could be building a new pipeline. More on that here.
However, building a pipe which in theory connects the east and west coasts doesn’t mean the gas which fills it will be economical.
“Don’t think this is going to get cheap gas into NSW — it’s going to be expensive gas,” Macfarlane said.
“We are literally talking about double-figure gas but double-figure gas is better than no gas at all. We’re talking about gas north of $10 a gigajoule.”
Earlier this week CEO of mining explosives and fertiliser manufacturer Incitec Pivot, James Fazzino, said Australia’s lack of energy policy is hurting the country’s investment environment. The company revealed in December it expects the gas bill at the Phosphate Hill fertiliser plant in Queensland will rise by $50 million a year in 2015-16.
There’s more here.
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