PERTH (miningweekly.com) – Australian oil and gas producers have called on the federal government to focus on new supply as the mandatory Gas Code of Conduct comes into effect.

The Code of Conduct is aimed at securing more gas at reasonable prices for domestic users, the government said in a joint statement.

“The Gas Code will ensure Australian gas is available for Australian users at reasonable prices, give producers the certainty they need to invest in supply, and help to ensure Australia remains a reliable trading partner,’ Climate Change and Energy Minister Chris Bowen said.

Producers have already offered indicative domestic supply commitments of at least 260 PJ to 2027. These indicative commitments reduce the risk of shortfalls as assessed by the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Market Operator (AEMO).

Bowen said that the final Code follows extensive consultation with gas producers and users to ensure it is fit for purpose.

The Code will ensure domestic prices are "reasonable" by establishing a price anchor, or mechanism to drag prices down, through the combination of a price cap, which is to be set at A$12/GJ and subject to a review commencing by 1 July 2025, and a process for qualifying for exemptions from the price cap on the basis of making satisfactory ACCC and court enforceable supply commitments. The Code will also allow small producers of gas to be exempt from the price cap if they supply only the domestic market.

In addition, it requires all participants to abide by standards of conduct to level the playing field between users and producers and deliver a better functioning, more competitive gas market.

The Australian Petroleum Production and Exploration Association (Appea) said the Code put the government at the centre of the gas market, determining the conditions for new supply through bilaterally negotiated agreements with gas producers.

Appea CEO Samantha McCulloch said the government must now focus on ensuring new gas supply to address looming structural shortfalls.

She noted that the AEMO and the ACCC have both warned of gas shortfall risks during peak winter periods from this year, and structurally from 2026/27, which carry with them severe risks to the economy.

McCulloch said the test for the government’s mandatory Code of Conduct would be if it could support investment that was urgently needed to bring on new gas supply.

“After more than 6 months of uncertainty as the Code was developed, investment in new gas supply is now urgently needed to avoid shortages that will add to energy security concerns and cost of living pressures for Australian households and business,” she said.

“The government has taken the reins of the east coast gas market and with this comes the responsibility for ensuring sufficient supply and investment certainty. The industry has consistently demonstrated its commitment to the domestic gas market, including with 260 PJ of new indicative supply commitments made during the Code consultations.

“Gas producers will work constructively with the government and users within the new framework established by the Code and in the development of the Future Gas Strategy announced in the May Budget.

“It is critical that the Future Gas Strategy delivers the long-term economic, energy security and emissions reduction opportunities associated with Australia’s natural gas resources while ensuring sufficient gas supply in the near to medium term,” she added.