The Australian Energy Market Operator this week suspended trading across the entire east coast electricity power network as a cold snap in NSW and Victoria sparked heightened demand for heating. AEMO had earlier imposed price caps on power generators,which have been squeezed by outages at ageing power stations and surging prices for the coal and gas used to generate electricity due to the Ukraine conflict.
The power crisis has reignited the debate over gas reservation policies,which force producers to set aside some gas for domestic use. Reservation is fiercely opposed by major oil and gas producers which have sold long term supply contracts to major buyers in offshore markets.
Woodside,the nation’s largest oil and gas producer would not comment on reservation,but said the crisis “has highlighted the important role gas plays in firming of power grids”.
It said one potential solution to the crisis may be to supply gas via floating,LNG storage and regasification units,and has signed a deal with Viva Energy which is building such a facility in Geelong.
On Friday,current WA Premier Mark McGowan also called for a domestic natural gas reserve for eastern states. Prime Minister Anthony Albanese appeared to agree,saying WA “got it right” with its 2006 gas reservation policy. WA is not suffering power issues being experienced on the east coast.
The chief executive of ASX-listed oil and gas producer Beach Energy,Morne Engelbrecht,warned earlier this month against any moves by lawmakers to impose retrospective gas reservation. “It will be detrimental to our sovereign risk,” he said.