The most controversial element of the proposal is a requirement that gas contracts are struck at prices that reflect production costs plus a margin allowing for a “reasonable” rate of return – a change that gas producers have criticised as a major intervention that ignores exploration and development risks and other significant expenses,and will imperil the availability and affordability of gas for Australian consumers.
However,in a speech to be delivered on Tuesday,Mark Abbotsford,the vice-president of marketing at Australian oil and gas producer Woodside,will say ongoing discussions with the government have been constructive,and the company was increasingly confident they will “land on a suite of measures” that would not have a negative effect on driving investment in critical new supplies.
“We absolutely understand the delicate balance before government of ensuring the interests of Australian households and businesses are supported,without impacting a vital export industry that delivers benefits to Australia and supports key strategic partners in our region,” Abbotsford will tell the Australian Domestic Gas Outlook conference in Sydney.
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“I do think we can land on a suite of measures that ensure a functioning market and a positive investment climate to deliver the energy Australians need.”
Despite the formal consultation period over the code finishing in February,the Australian Competition and Consumer Commission (ACCC) on Monday confirmed talks with the gas industry,the federal Energy Department and Treasury were continuing.
“Government is moving forward to develop the code and our understanding is that it intends to release a code for consultation and finalisation in the first half of the year,” an ACCC spokesperson said.