The Australian government has reportedly reached an agreement with the three leading east coast gas suppliers to ensure that an adequate supply of fossil energy is available to avert any possible shortage next year.

Madeleine King, the federal resource minister, announced on Thursday that she had inked the latest head of contract with the three major LNG exporters, namely Shell's QGC operations, Santos' GLNG plant, and APLNG group that is led by ConocoPhillips.

King stated that the so-called gas trigger, commonly known as the Australian Domestic Gas Security Mechanism, will not be used for market intervention and secure supply to fulfill demand in the eastern states. The decision to use the trigger had to be taken before October 1st.

In July, the Australian Competition and Consumer Commission estimated 56 petajoules (PJ) worth of gas shortage for domestic consumers in 2023. The main three LNG exporters, who control over 90% of the reserves on the east coast, were strongly urged to enhance supplies by the competition regulator.

According to the government, the principle for that uncontracted gas is that domestic gas users will not be paying more than foreign gas customers.

The firms also decided to be more open, and under ACCC supervision, they will submit quarterly reports to King. Additionally, King will meet with every firm on a quarterly basis to ensure that they are abiding by the code of conduct.

Gas suppliers had warned Australia's standing as a trustworthy seller would be at risk if the government acted to divert gas.

Others, however, have criticized the gas exporters for selling uncontracted gas to profit from the skyrocketing global prices following Russia's attack on Ukraine.

European countries are scrambling to provide alternative gas exports because of the sanctions against Russia.

Energy Quest analyst Graeme Bethune stated that Australian gas has yet not been diverted to Europe.

Increasing gas prices affect electricity prices as well since fuel is frequently the price-setting factor in the wholesale energy market.

Source credit: https://www.theguardian.com/australia-news/2022/sep/29/australian-government-strikes-deal-with-gas-suppliers-to-avoid-winter-shortfall