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Australian gas crisis blamed on state restrictions

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LNG Industry,

Bloomberg are reporting that Australian Prime Minister Malcolm Turnbull is blaming road blocks to gas exploration on the east coast for a looming domestic supply crisis.

Turnbull is soon to meet all the country’s major upstream producers. He will discuss how they can restart gas exploration despite restrictions from state governments.

Sydney-based AGL Energy Limited walked away from gas exploration and production activities in February last year, citing commodity price volatility and long development lead times. It previously said state restrictions on exploration could affect earlier plans to spend about AUS$2 billion on coal seam gas operations in New South Wales. The state of Victoria and the Northern Territory have a moratorium over onshore gas exploration.

Australia’s eastern states need additional energy to stave off an expected shortfall in gas-powered electricity generation in the 2018 – 19 southern hemisphere summer. Gas producers have forecast an annual decline from 600 petajoules in 2017 to 478 petajoules in 2021.

Origin Energy Limited announced that Queensland gas intended for LNG exports to Asia may be diverted to ease an expected supply shortfall this winter.

Royal Dutch Shell Plc, owner of the US$20 billion Queensland Curtis LNG development, announced that its QGC Ltd. subsidiary will continue to make gas available where the company have the capacity to do so.

On a per-capita basis, Australia is the largest user of wind and solar energy, and will be the global leader in LNG exports by 2020.

Turnbull has previously flagged the possibility of subsidizing clean-coal power stations to help improve energy security and reduce consumer power bills. The response from industry has been muted. Two of Australia’s largest power companies, AGL and Energy Australia, have ruled out building new coal-fired capacity.

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