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ADGSM reforms take effect

30th March 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Reforms to the Australian Domestic Gas Security Mechanism (ADGSM) will come into effect on Thursday, giving the federal government more flexibility to use the mechanism, if needed, in the event of a material forecast shortfall in domestic gas supplies.

Minister for Resources and Northern Australia Madeleine King said the reforms would ensure Australian homes, small businesses and heavy industry could count on Australian gas to meet their needs while also adding protections for long-term contracts with international trading partners.

She said that the changes also strengthened protections for international investors with long-term contracts with key export markets such as Japan, South Korea and Malaysia.

“The changes will deliver more flexibility and mean decisions to activate the ADGSM to secure domestic gas supplies can be made every quarter, rather than only once a year under the old regulations,” King said.

“The changes follow extensive consultations with industry, stakeholders, export partners and the public, which led to improvements in the design and operational effectiveness of the ADGSM.

“The reforms balance the need to guarantee sufficient domestic gas supply while also safeguarding Australia’s global reputation as a stable and reliable supplier of energy to our export markets.

“Ultimately, it is in everyone’s interests – producers, suppliers, users and investors – for the domestic gas market to remain well-supplied.

King said the changes were needed because the ADGSM, as designed by the previous government, was not suited to deal with the energy crisis that emerged in 2022 and ongoing gas market volatility.

These changes to the ADGSM complement the other measures the government is taking to improve energy security, reliability and affordability including a new Heads of Agreement with East Coast liquefied natural gas exporters to prevent a gas supply shortfall, delivering an additional 157 PJ of gas to the east coast market in 2023.

The government has also established a new mandatory Code of Conduct to ensure Australian gas users have access to Australian gas at reasonable prices, and has extended the Australian Competition and Consumer Commission’s Gas Inquiry to 2030.

The Australian Energy Market Operator will also have extended powers to intervene and respond to gas system security concerns and manage volatility, while the government has moved to improve the Australian Energy Regulator’s monitoring and compliance role to ensure gas suppliers and pipeline providers are acting in the best interests of consumers.

The Australian Petroleum Production and Exploration Association has previously warned that the proposed changes to the ADGSM risked undermining Australia’s role as a trusted trade and energy partner while doing nothing to address the underlying factors behind forecast domestic gas shortfalls.

The industry body warned that the proposed changes broadened ministerial discretion to limit exports and could leave key trading partners, such as Japan, with as little as 30-days notice for breaking critical gas contracts.

Edited by Creamer Media Reporter

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