Gas Industry

Mr VAN HOLST PELLEKAAN (Stuart) (14:25): Supplementary: given that the Treasurer said in his answer that 'more gas means cheaper gas', does he disagree with the report of the Natural Resources Committee that was tabled on Tuesday that finds that domestic prices for gas are now linked to the international market and are not expected to return to previously low levels?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:26): Again, I will explain what's going on to the shadow minister who, quite frankly, given his support of the moratorium, if he had any principles, he would resign, but why let principles get in the way of a career? What's occurring is that a lot of the gas producers who built the GLNG export facilities in Queensland locked in prices on the basis of the cost of a barrel of oil at print. As the cost of oil is dropping, so is their sale price for gas.

That is very different from the domestic sales of gas here, which are on the spot market, which we know are considerably higher than they are at GLNG. What is occurring is, because of the investments and the contracts that these companies have written, they have a guaranteed sale price linked to the cost of a barrel of oil. But in domestic gas use, obviously there are other forces at play, and those other forces at play are demand.

What we are seeing, perversely, is a shortage of domestic gas which means more expensive gas, because most of the gas they are extracting out of our fields is going for export. Because it is going for export, there is less gas to provide to the domestic market, so the price is higher. But there is not sufficient gas in that domestic market to raise sufficient revenues to go out and explore and drill more holes for more gas to have a more liquid market. That is why we have had to intervene with our PACE gas program.

I will tell you what does the most damage to gas production in this state: moratoriums, moratoriums on the basis of no science, no committee report, and no evidence—pure base politics simply because the Liberal Party are losing their base. They are worried about Nick Xenophon, they are worried about the Greens, so what do they do? They ban gas exploration. They ban the mining of gas, and when you ban the mining of gas, you increase power prices. When you increase power prices, you make South Australia less affordable to invest in. Quite frankly, the opposition have no credibility whatsoever on this issue.