Ministerial Statement

Moomba Gas Supply Hub

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:02): I seek leave to make a ministerial statement.

Leave granted.

The Hon. A. KOUTSANTONIS: Last week, I wrote to the managing director and chairman of the Australian Energy Market Operator (AEMO), Mr Matt Zema, to immediately proceed with the developmental work to enable the implementation of a gas trading exchange framework at Moomba. I had previously contacted the joint venture partners who own and operate the Moomba facility, namely Santos, Beach Energy and Origin Energy, to indicate that the government will be asking AEMO to establish a Moomba gas supply hub. There was unanimous support for the proposal.

Similar to the Wallumbilla hub in Queensland—the first gas supply hub, established in March 2014—Moomba is a suitable location for the establishment of a gas supply hub because it is a major point of transit connecting Queensland and the southern states with significant production and storage capability. While establishing the first gas supply hub was a major reform in Australia's energy market, the requirement to physically deliver gas through Wallumbilla has sidelined some of the market participants. Several gas participants are unable to trade at the Wallumbilla hub as it requires physical delivery of the gas. This means sellers have to have the capacity to transport gas to Queensland to access the market.

Basically, we are creating a commodities exchange that specialises in gas and we want to do that here in South Australia where the gas is sourced. Just like commodity exchanges around the world, participants are able to use a transparent trading platform to secure the best price by matching offers to bids. Efficiency and transparency reduces risks, helps suppliers and buyers better manage their businesses and creates an environment that is more attractive to investment. It will ensure that investors in our state have efficient, low-cost options for trading gas.

South Australia is front and centre in the energy revolution, so it makes increasingly more sense to give market participants an alternative trading platform close to where they operate, which they can all access. A gas supply hub at Moomba will make it easier for smaller explorers and producers to individually value and market their gas, as well as potentially facilitate increased competition and greater price transparency. Further, the resulting efficiency benefits would support future gas supply agreements and investment while enabling the entry of new large users of gas and reduce risks associated with long-term investments in gas fields by having the ability to on-sell gas via the supply hub.

The east coast gas market is facing a period of unprecedented change, driven by increased demand and the development of a significant liquefied natural gas export program. As the gas sector transitions from a local focus to one that services domestic and export markets, mechanisms that support continued exploration and development of the Cooper Basin will increasingly play a significant part in securing a reliable supply of energy.