KALGOORLIE (miningweekly.com) – The resources sector has welcomed the federal government’s plans to increase domestic gas supplies, but has warned against unintended consequences of market intervention.

Resources Minister Matt Canavan and Energy Minister Angus Taylor on Tuesday announced that they would be reviewing a range of policies, including gas reservation, pipeline access, and price transparency, to combat the increasing price of domestic gas on the eastern coast of Australia.

“Past approvals of large gas export projects have not adequately considered the impact on the domestic gas market and that has contributed to some of the pressures we have seen in recent years. We cannot afford to repeat these past mistakes,” the Ministers said in a joint statement.

Canavan said that a gas reservation policy, such as the one used in Western Australia, could be adopted nation-wide.

"Imitation's the best form of flattery and what we're seeking to do is to imitate the best things about what is working in the west and possible apply it to eastern Australia," he was quoted by the ABC.

"That's why we're going to have those discussions in a diligent, considered way in coming months and formulate whether or not we can do something to reserve gas here in eastern Australia for our own use."

The Australian Petroleum Production and Exploration Association (Appea) on Tuesday said that the measures announced by the Australian government highlighted that increased gas supply remains the most pragmatic response to ensuring competitive prices are available to Australian homes and businesses.

Appea CEO Andrew McConville said the industry was committed to ensuring Australia continued to have a secure, sustainable and competitive natural gas supply for households and businesses.

“Sensible reforms can improve the efficiency of the gas market and its operation. But market interventions can adversely affect confidence in the oil and gas sector and discourage new market entrants and supply diversity. We will work closely with the government to ensure confidence is restored, not undermined,” McConville said.

“We have consistently highlighted that while governments may seek to intervene in markets for political purposes, there should be no illusion that intervention is without costs – not least of which that sovereign risk can adversely affect confidence in the sector.”

McConville said the best way to put downward pressure on gas prices remains more gas supply. 

“Eastern Australian gas users have paid a high price for unnecessary, unscientific restrictions on gas development in Victoria, New South Wales and, until recently, the Northern Territory. Removing these restrictions is the best way to ensure sustained gas supply.”

The Queensland Resources Council has also welcomed the development of further gas supplies, with CEO Ian Macfarlane saying that the measures being considered by the federal government could help increase supply for domestic use, supporting jobs and industries.

“The free ride for New South Wales and Victoria is over. But you can’t reserve gas that hasn’t been developed, so it’s time for the southern states to end their unscientific, politically-motivated bans on gas projects,” Macfarlane said.

“For too long, the southern states have been coasting off investments made in Queensland, while refusing to develop their own resources. New South Wales and Victoria cannot expect Queensland to continue to do all the heavy lifting while they do nothing.”