Government Gas Reserve Plan Stirs Hopes for Industrial Revival
The Australian government's plan to reserve more domestic gas is expected to revive the onshore industrial sector, particularly in the chemical industry. From next July, a new regulation will require shippers of liquefied natural gas (LNG) from eastern Australia to divert up to 20% of their export volumes to local homes and businesses.
This policy aims to mitigate the impact of the mid-2010s LNG boom, which exposed domestic gas users to global prices and made it difficult for manufacturers to secure affordable supplies. As a result, several major chemical facilities were forced to shut down or reduce production due to high gas costs.
Coogee Chemicals' methanol plant in Melbourne's west is one of the potential beneficiaries of this policy. The company has mothballed its facility since 2016 and plans to restart it if the government can deliver affordable gas supplies. 'For methanol, gas is the No.1 cost,' said Coogee chief executive Grant Lukey.
However, industry leaders and major producers in the energy sector have expressed concerns that this policy will artificially depress prices, making investment in new gas fields uneconomic and increasing the risk of future supply shortages and price shocks.