A strong export market is predicted to force up local gas prices.
A strong export market is predicted to force up local gas prices. Contributed

Local gas mining won't keep prices down

AN INQUIRY into the state's gas supply has found expanding coal seam gas mining would not push down prices in New South Wales.

A report published yesterday indicated prices will triple without government intervention, the price rise the result of a booming Asian export market, not a shortage of mining operations.

The report said domestic price regulation - including an Australia-wide gas reservation policy - is one of the only ways to ensure prices do not skyrocket.

In a state that imports 95% of its gas, the market's rapid shift towards exports is expected to have a major impact on NSW prices.

Four export facilities worth $75 billion are under construction on the Queensland coast.

The parliamentary committee responsible for the report based its recommendations on the submissions of 36 stakeholders, including mining companies, the NSW Government and manufacturing bodies.

The Australia Institute said wholesale gas prices in NSW were historically around $3 to $4 per gigajoule, while Asian prices sat at about $15.

It predicted domestic prices would triple unless the government stepped in.

"Once domestic gas producers can sell onto the international markets, prices in Australia will rise from their historic $3 or $4 to closer to the world price," it stated.

"Eastern Australia's wholesale prices will remain below world-delivered prices as gas produced here does not need to be processed and transported.

"Most analysts believe Australian wholesale gas prices will reach $9 per gigajoule."

The NSW Government has been a vocal supporter for ramping up CSG mining to fight a supply shortage and expected rising prices.

The parliamentary committee recommended those plans be put on hold until all of the recommendations of last year's Independent Review of Coal Seam Gas Activities in NSW had been implemented.

"This report also argues that the development of the state's coal seam gas reserves will not, on its own, act to address the challenges facing the gas market in NSW," the report stated.

"The committee recommends pursuing an Australia-wide gas reservation policy, to assist in containing gas prices and to ensure security of supply."

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