The head of one of the country’s largest power utilities has warned there is no quick fix to the crisis that is enveloping the country’s energy supplies, as Energy Minister Josh Frydenberg warned that the country is producing too little gas, and exporting too much.
Responding to the surge in both electricity and gas prices, amid the warning of gas shortages emerging as soon as the summer of 2018, Prime Minister Malcolm Turnbull on Thursday called for meetings to be held with gas producers to find a way of resolving the looming shortfalls.
Ms Catherine Tanna, who heads up EnergyAustralia, one of the country’s largest energy utilities, warned there is no quick fix to the present challenges.
“I’d be very wary of anybody suggesting there are quick fixes here,” Ms Tanna said at theThe Australian Financial Review Business Summit in Sydney.
“We’re in for a couple of years of challenging times. We need to prepare ourselves and do the best that we can do. Prices have gone up and we’re in for a couple of years of managing our way through that.”
Ms Tana said moratoriums on gas exploration should be lifted. “But that is no magic, silver bullet,” she said. “That’s not going to produce gas next week, but to bring gas prices down sustainably, over the long term, we need more supply.”
Ms Tanna also said there is no need to change the national electricity market, although it may make sense for it to be operated “a little more conservatively” while the present challenges are resolved.
Energy Minister Josh Frydenberg blamed a “confluence of factors”, building over a period of time, for the emerging crisis.
“Two thirds of what [gas] we produce now goes for export and the fact that we have [international] parity pricing, but also the [exploration] moratoriums and bans … not just on unconventional gas exploration but also on conventional offshore gas exploration,” he told the summit.
“We’re producing less than we should and we’re exporting more than we have. That is leading ot a tightness in the market and with gas increasingly setting the price for electricity as our major coal-fired power generators are being phased out, it is affecting all parts of our energy system and we do need to fix it.”
Mr Frydenberg reiterated the government’s opposition to establishing gas reservations although he did applaud a recent move by the Queensland government to give a new exploration licence in the Surat Basin to supply the domestic market.
“I thought that was quite creative since it avoided the issue of conflicting with existing contracts or sovereign risk arguments,” Mr Frydenberg said.
“We’ve got a ridiculous situation where some gas in Victoria for example, is making its way to Queensland for export and businesses in Victoria… are really facing punishing prices.”
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