Eastern Australian Gas Market Study
Submission Guide
Closing Date – 5pm AEDT Friday, 7 February 2014
Request for feedback and comments
The Commonwealth Department of Industry and the Bureau of Resources and Energy
Economics have completed the Eastern Australian Domestic Gas Market Study (the Study).
The Study analyses the drivers of gas supply, demand and price and examines policy
options that governments could consider to address supply constraints and improve the gas
market’s ability to respond to price signals.
The Government has not committed to, nor concluded its consideration of, policy options
identified in the Study. Each option would require more detailed specification and
assessment of costs and benefits if pursued. It is intended that feedback on the Study and
further consultation with stakeholders will inform this consideration and the proposed
Eastern Australian Gas Supply Strategy to 2020 (the Strategy). The Strategy will be an
important input to the Energy White Paper, which is the subject of a separate consultation
process.
While feedback is welcome in any form, this guide has been developed to help stakeholders
prepare submissions in response to key questions around the six policy option themes of:
gas market reform; supply competition; data and transparency; infrastructure; non-market
interventions and governance. While these questions only expand upon options presented in
the Study, views on relevant matters outside these options are also welcome.
Policy options for comment
The linking of the eastern gas market to the liquefied natural gas export market is presenting
a number of challenges with the potential for significant adjustment in various sectors. These
are discussed in detail in Chapters 1 to 5 of the Study. The policy options are outlined in
Chapter 7 and are aimed at removing supply constraints and facilitating a well-functioning
market that can efficiently transition to a larger and more dynamic market.
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Summary of options for government consideration in the Study
I.
Gas market reform agenda
1. Consider commissioning a review of gas market competition to focus on matters
driving wholesale market outcomes
2. Complete current SCER reforms (especially commence Wallumbilla hub and support
pipeline capacity trading)
3. Agree a forward gas market reform agenda in consultation with stakeholders:


II.
Promote gas supply competition
1.
2.
3.
4.
III.
develop principles to guide policy on commodity, transportation and financial
markets
conduct specific reviews on the direction and structure of the existing trading
and related financial markets
Address regulatory impediments to supply
Improve title administration and management
Jointly facilitate priority gas projects
Improve access to and cooperation on pre-competitive geoscience
Improve commercial and regulatory environment for infrastructure
1. Improve information to markets and regulators on pricing and utilisation of
infrastructure
2. Review suitability of carriage models for pipeline regulation
3. Consider support for infrastructure feasibility studies
4. Enhance capacity trading and develop roadmap and evaluation process around
future development of pipeline capacity trading
IV.
Market data and transparency
1. Improve information to markets on CSG delivery risks
2. Improve planning and transparency mechanisms such as the Gas Statement of
Opportunities and Bulletin Board, and industry initiatives (e.g. price indices, pipeline
information)
V.
Role for non-market interventions?
1. Reservation policy and national interest tests- should these be ruled out?
VI.
Governance and Implementation Issues
1. Improve gas market governance – better data and analysis of gas market issues,
better monitoring and supervision of market - particularly of cross-jurisdictional issues
2. Develop clear accountability timelines and protocols for SCER and institutions and
update the Australian Gas Market Development Plan
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I.
Gas market reform agenda
Informed forward reform agenda promotes efficiency over time
Market increasingly flexible and responsive
Given the rapid changes occurring in the eastern Australian gas market, the Study identifies
an opportunity to use the current experience to consider the forward gas market reform
agenda.
Options to progress this agenda are examined in section 7.4 and include: commissioning a
review of gas market competition; completing current Standing Council on Energy and
Resources (SCER) reforms; and agreeing a framework to guide forward gas market reforms.
To underpin consideration of a forward agenda, the Study also includes the options of
seeking agreement on principles to guide gas market development in response to changing
conditions and conducting specific reviews of facilitated markets.
The Department seeks feedback from stakeholders regarding:
1. What should the key objectives and priorities be for the eastern gas market reform
agenda in the short, medium and long term?
2. Specifically, is there merit in commissioning a review of gas market competition? If
so, what are the key elements to consider for the terms of reference and review
mechanism?
3. What are the appropriate principles to underpin that reform (or views on draft
principles in 7.4.3)?
4. What implementation models do you advocate for progressing reforms?
5. What should the key performance indicators of a well-functioning eastern gas market
be?
6. What priority should be placed on reviewing trading markets?
II.
Promote gas supply competition
Upstream commercial and regulatory environment enables response to price signals
The Study found that facilitating and encouraging a supply response is fundamental to
alleviating the risk of gas supply shortfalls. Section 7.5 examines the following options to
promote gas supply competition: addressing regulatory impediments to supply; improving
title administration and management; jointly facilitate priority gas projects; and improving
access to and cooperation on pre-competitive geoscience.
The Department seeks feedback from stakeholders regarding:
7. What are the key barriers or impediments to bringing on gas reserves?
8. How would you prioritise government action for removing unnecessary impediments
or facilitating specific projects?
9. Beyond facilitating and encouraging supply, are there other actions needed by
governments to promote competition in supply?
10. Are there specific actions in title administration and management, or pre-competitive
geoscience information, which should be given priority? What are the roles for
industry and governments in those actions?
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11. How could regulatory frameworks be improved to avoid unnecessary delays in gas
supply development?
III.
Improve commercial and regulatory environment for infrastructure
Infrastructure sufficient, accessible and promotes market outcomes
The Study questions whether the provision of timely and sufficient infrastructure will continue
to be effective in the future. Options to enhance the provision and use of gas supply
infrastructure are discussed in section 7.6 and include: improving information to markets
and regulators on the pricing and utilisation of infrastructure; reviewing the suitability of
carriage models for pipeline regulation; considering support for infrastructure feasibility
studies; and enhancing capacity trading and developing a roadmap and evaluation process
around the future development of pipeline capacity trading.
The Department seeks feedback from stakeholders regarding:
12. Do you consider that the current gas supply infrastructure is adequate to support new
upstream gas supply and effective competition?
13. What type of information, if any, would help improve price discovery and utilisation of
infrastructure?
14. Do you support exploring the merits of contract vs market carriage options? If so,
how would you recommend pursuing this work?
15. Is there a role for government in supporting feasibility studies on potential
infrastructure projects? If so, what would be some of the key infrastructure proposals
that should be assessed?
16. What do you see as the merits or otherwise of enhancing pipeline capacity trading?
What are the main issues to consider when developing a roadmap for this reform,
including implementing recent SCER commitments?
IV.
Market data and transparency
Information supports efficient investment and operational decisions
The Study identifies that improvements to market information may provide an immediate
opportunity to alleviate uncertainty in the eastern gas market and assist consideration of a
future gas market reform agenda. Section 7.7 examines the options of: improving
information to market on coal seam gas (CSG) delivery risks; improving planning and
transparency mechanisms such as the Gas Statement of Opportunities (GSOO) and
National Gas Market Bulletin Board, and encouraging industry-led transparency initiatives.
The Department seeks feedback from stakeholders regarding:
17. To what extent do you consider that improved market information on CSG delivery is
important to assist market participants in managing risk? To the extent that this is
considered a significant issue, what specific information is most important and why?
18. To what extent do you consider such data could be delivered via voluntary reporting?
What commercial sensitivities would need to be addressed? What mechanisms
should be used to collect the data and who should be responsible for data collection?
What would be the likely compliance costs?
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19. Is there merit in the government considering pursuing mandatory reporting of such
data?
20. Are there priority areas for improvement to the National Gas Market Bulletin Board,
Short Term Trading Market and GSOO?
21. Are there any other key information gaps that, if filled, would enhance the operation
of the market? What would be likely sources of significant costs and benefits of
addressing these gaps?
22. What do you see as the role of forward markets for improving wholesale market
efficiency? Do you see there is a need to improve on current markets and what would
you propose as the mechanism for progressing any reforms?
23. What do you see as the role of industry-led approaches in the Study, like price
indices? Are there any other industry-led initiatives or tools that could assist
stakeholders and what should be the role of government in facilitating such work?
V.
Role for non-market interventions?
Section 7.8 of the Study poses the question about whether governments should maintain
the option to implement a form of domestic reservation policy or export control.
The Department seeks feedback from stakeholders regarding:
24. Should non-market interventions like reservation policy or export controls be ruled
out?
25. What circumstance(s) would support a potential role for non-market interventions in
the eastern gas market? What would be the objective/s of such an intervention?
What mechanism/s would you advocate, including views on managing trade-offs or
any negative consequences?
VI.
Governance and Implementation Issues
Community, participants, and governments have confidence in market outcomes
Clear accountabilities and governance support operations and policy
The successful functioning of the gas market requires sound policy development and
implementation by the responsible institutions. Section 7.9 considers the options of:
improving gas market governance and developing clear accountability timelines and
protocols for SCER and institutions.
The Department seeks feedback from stakeholders regarding:
26. Are there mechanisms for improving the gas market governance framework,
including the role and responsibilities of SCER and institutions?
27. What would be useful processes to facilitate stakeholder engagement and improve
accountabilities?
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Submission Process
Stakeholders are encouraged to make submissions on the issues, or more relevant subset
of issues, addressed in this paper. In making submissions, stakeholders should focus on
providing evidence of the potential impacts of the options under consideration and provide
details about the advantages and disadvantages, costs and benefits and risks associated
with each option presented.
All information (including name and address details) contained in submissions will be
made available to the public on the Department’s website unless stakeholders indicate
that all or part of a submission is confidential. Submissions may still be subject to Freedom
of Information Act 1982 (Cth) provisions. The Australian Government reserves the right to
refuse to publish a submission, or parts of a submission, which contain offensive language,
potentially defamatory material or copyright infringing material.
The closing date for submissions is 5pm AEDT Friday, 7 February 2014.
Late submissions may not be considered
While submissions may be lodged electronically or by post, electronic lodgment is preferred.
For accessibility reasons, please email responses in a Word or RTF format. An additional
PDF version may also be submitted.
Email
gas@industry.gov.au
Mail
General Manager
Onshore Gas – Energy Division
Department of Industry
GPO Box 1564
Canberra, ACT 2601
Enquiries
May be made directly to gas@industry.gov.au
The Department is also happy to meet with stakeholders to discuss specific views, but
places a strong emphasis on submissions relevant to strategy being placed in the public
domain. Depending on the level of interest the Department is considering hosting a forum to
discuss these issues early in 2014 in Canberra. To register your interest in attending any
such forum and for further information, email gas@industry.gov.au.
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