Gas Market Development Plan – Summary as at December 2015
Policy Stream
The National Gas Objective is to promote efficient investment in, and efficient operation and use of, natural gas services for the long term interests of consumers of natural gas with respect to price, quality, safety, reliability and security of supply
of natural gas. Ministers have agreed to an Australian Gas Market Vision statement, which outlines four key areas of focus for the next phase of gas market reform and development. The COAG Energy Council will initiate actions to improve:
Competitive Supply, Transparency and Price Discovery, Risk Management, and Removing Unnecessary Regulatory Barriers.
Encouraging Competitive Supply
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Current Reforms
Underway
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Forward Actions
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Improvements are made to the regulatory and investment
environment so that gas supply is able to respond flexibly to
changes in market conditions.
A ‘social licence’ for onshore natural gas development
achieved through inclusion, consultation, improving the
availability and accessibility of factual information relating to
resources projects, and rigorous science to ensure that the
concerns of communities will be addressed.
On 4 December 2015, the COAG Energy Council agreed to a
gas supply strategy to maximise the benefit to the Australian
community from the responsible development of all gas
resources.
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Increased flexibility and opportunity for trade in pipeline
capacity.
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A competitive retail market that will provide customers
with greater choice and large users with enhanced
options for self-supply and shipment.
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The provision of accurate and transparent market
making information on pipeline and large storage
facilities operations and capacity, upstream resources,
and the actions of producers, export facilities, large
consumers and traders.
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Implementation of the AEMC’s Stage One
recommendations is underway:
o The AEMC is working closely with the Australian
Bureau of Statistics to develop a wholesale gas
price index with industry consultation in early 2016.
In response to domestic gas supply concerns, the Upstream
Petroleum Resources Working Group’s fourth annual report
on unconventional gas reserves/resources and production,
including new well drilling rates and production forecasts, was
released on 30 November 2015. The report has been
renamed Coal Seam, Shale and Tight Gas in Australia:
Resources Assessment and Operation Overview 2015.
o On 26 November 2015, COAG Energy Council
officials submitted a rule change request to the
AEMC to harmonise gas day start times across
eastern Australian gas markets.
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Investigate opportunities to improve information availability
and accessibility to local communities, informed by robust
science.
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Facilitate major gas supply and infrastructure projects which
are material to a supply side response to gas prices.
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Consider the Australian Competition and Consumer
Commission’s findings from the East Coast Gas
Inquiry. The Final Report is due April 2016.
Pursue market based initiatives and, while noting different
existing jurisdictional approaches, not pursue national
reservation policies or national interest tests.
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The Upstream Petroleum Resources Working Group will
provide advice on medium-term strategic issues relevant to
the acreage release process.
Work with AEMO and the Commonwealth Department
of Industry, Innovation and Science’s Office of the
Chief Economist (formerly BREE) to improve
availability of market information and analysis.
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Continue reform efforts to improve demand forecasting
and stakeholder participation that inform the Gas
Statement of Opportunities.
The Council notes the importance of further consideration of
competition issues and barriers to entry which may be
inhibiting opportunities to make supply more competitive.
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Following the release of the AEMC’s final determination
concerning the gas transmission pipeline capacity
trading information rule change request, officials will
work with AEMO to implement the rule change.
The Council will aim to facilitate supply responses, by
removing unnecessary regulatory impediments, streamlining
regulation across governments and improving the availability
of information.
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o On 31 March 2015, COAG Energy Council officials
submitted a rule change request to the AEMC to
mandate the provision of enhanced pipeline
capacity information for publishing on the NGBB.
The AEMC is due to release the final determination
in mid-December 2015.
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Risk Management
Transparency and Price Discovery
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AEMO is identifying opportunities for incremental
improvements to the Gas Statement of Opportunities,
particularly with respect to CSG to LNG.
Continue to work with AEMO and the AEMC to
enhance gas market information published on the
NGBB.
Following implementation of the Gas Transmission
Pipeline Capacity RIS, the COAG Energy Council will
review the effectiveness of the measures and consider
further actions on secondary pipeline capacity trading.
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Liquid and competitive wholesale spot and forward markets
for gas in Australian gas markets which provide tools for
participants to price and hedge risk.
Access to regional demand markets through more
harmonised pipeline capacity contracting arrangements which
are flexible, comparable, transparent on price, and nondiscriminatory in terms of shippers’ rights, in order to
accommodate evolving market structures.
Harmonised market interfaces across Australian gas markets
that enable participants to readily trade between locations and
find opportunities for arbitrage and trade.
Identified development pathways to improve interconnectivity
between supply and demand centres, and existing facilitated
gas markets, which enable the enhanced trading of gas.
The COAG Energy Council tasked the AEMC to undertake
the East Coast Wholesale Gas Market and Pipeline
Frameworks Review, to assess the number, location and
function of facilitated gas markets and gas transportation
arrangements in eastern Australia. Officials are progressing
short-term reform actions recommended in the AEMC’s Stage
One Report. The COAG Energy Council is currently
considering the AEMC’s draft Stage Two Report and will
assess whether changes are required to existing facilitated
markets and transportation arrangements, or whether new
markets are required.
AEMO is undertaking detailed design to implement a Moomba
Gas Supply Hub by June 2016. A Moomba trading location
will improve market signals via greater price transparency and
competition at a key gas supply and transit location.
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The COAG Energy Council tasked AEMO to review the
operation of the Wallumbilla Gas Supply Hub. In December
2015, the COAG Energy Council agreed to AEMO’s
recommendation to implement the introduction of a voluntary
single market via its ‘Optional Hub Services’ model. This is
expected to improve liquidity at Wallumbilla by pooling buyers
and sellers at a single location and providing participants with
a mechanism to trade supporting services.
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The COAG Energy Council will consider the Australian
Competition and Consumer Commission’s findings and final
report from the East Coast Gas Inquiry which is due to be
delivered in April 2016.
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Facilitated gas markets are an important risk management
tool for gas market participants. The COAG Energy Council
will progress agreed reforms from the AEMC Review for a
long-term market development path toward achieving the
Council’s Gas Market Vision.
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The Wallumbilla and Moomba Gas Supply Hubs will improve
price transparency and could potentially support the
development of a gas futures market, which will enable
participants to manage and price risk.
Removing Unnecessary Regulatory
Barriers
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Regulation of gas supply and
infrastructure is appropriate and enables
participants to pursue investment
opportunities, in response to market
signals, in an efficient and timely manner.
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The Australian Government is committed
to delivering a One-Stop Shop for
environmental approvals that will accredit
state planning systems under national
environmental law. The One-Stop Shop
policy aims to simplify the approvals
process for businesses, lead to swifter
decisions and improve Australia's
investment climate, while maintaining high
environmental standards.
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The Industry Growth Centres Initiative will
boost the competitiveness and
productivity by identifying opportunities to
reduce regulatory burden as well as
improve collaboration, engaging markets,
and skills. The Oil, Gas and Energy
Resources Growth Centre is due to start
in early 2016.
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The COAG Energy Council’s National
Harmonised Regulatory Framework for
Natural Gas from Coal Seams provides
guidance to regulators in the
management of CSG and aims to ensure
regulatory regimes are robust, consistent
and transparent across all Australian
jurisdictions. The third annual report was
published in December 2015.
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Work with Growth Centres to continue to
improve competitiveness and productivity.
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Continue to report and continuously
improve the National Harmonised
Regulatory Framework for Natural Gas
from Coal Seams.
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Continue to pursue efforts to streamline
environmental approvals processes that
accredit states to make approval
decisions under national environmental
law.
Abbreviations: AEMC – Australian Energy Market Commission; AEMO – Australian Energy Market Operator; BREE – Bureau of Resource and Energy Economics; CSG – coal seam gas; NGBB – National Gas Bulletin Board;
LNG – liquefied natural gas; RIS - regulation impact statement; SCER – Standing Council on Energy and Resources (now COAG Energy Council)