PERTH (miningweekly.com) – The Australian Petroleum Production & Exploration Association (Appea) on Monday welcomed recommendations that the Australian government should remove inappropriate barriers to gas production and should minimise the regulatory burdens on the gas producers.

Appea was responding to a report from independent researcher the Grattan Institute, which indicated that gas price increases would put severe pressure on some manufacturing industries, including food processing, paper and packaging, explosives and fertilisers.

The gas price increases were also likely to price gas-fired power out of the electricity mix, leading to more coal being used for electricity generation, which would have a damaging effect on the climate and Australia’s emission targets for 2020.

“The emergence of an Australian gas export industry, projected to be worth A$60-billion a year by 2018, is driving the latest price increases, since domestic consumers will have to pay gas suppliers the same high price that suppliers can fetch on a global market,” Grattan energy programme director Tony Wood said on Monday.

However, he noted that despite the increases, the emerging export industry would deliver overwhelmingly positive economic benefits for Australia.

“Governments are already coming under pressure to protect Australian industry and consumers from the price rises. They should resist it.

“Reserving or substituting gas for domestic use will add more costs than benefits and do nothing to increase supply. And in the long run, protection harms everyone,” Wood said.

The report has urged the government to remove the remaining barriers to a well-functioning market, to ensure that Australia gets reasonable value for its exports.

Appea CEO David Byers said on Monday that leadership was urgently required to allow for the responsible exploration and production of natural gas in New South Wales and Victoria to secure supply and put downward pressure on rising prices.

“Natural gas is vital to millions of households, but also to the commercial, industrial and agricultural sectors that rely on natural gas for the manufacture of products such as chemicals, plastics, pharmaceuticals, fertilisers, paints, pesticides and cosmetics, and the production and processing of food and fibre. 

“Bipartisan support for natural gas production in Queensland has resulted in tens of thousands of jobs, regional investment and a A$65-billion industry.”