PRICE WAR: A plant operator working at one of APLNG's new gas processing facilities.
PRICE WAR: A plant operator working at one of APLNG's new gas processing facilities.

HEAT ON: Island LNG projects await export curb decision

THE gas giants exporting millions of tonnes of liquefied natural gas from Curtis Island have been put on notice as the Federal Government considers whether it should trigger curbs on exports next year.

Minister for Resources Matthew Canavan is reserving the right to implement the Australian Domestic Gas Security Mechanism.

Gas industry analysts worry the triggers will be pulled with industrial buyers expecting to pay more than $10 a gigaJoule next year.

The export controls were agreed on by the operators of the three Curtis Island plants - APLNG, GLNG and QCLNG - last year to free up gas supply for Australian users.

Credit Suisse research analyst Saul Kavonic said the gas sector was not immune to Australia's "parliamentary circus", and expects the industry to be a burning topic during the next federal election.

The political battle is already under way with the gas industry quick to raise concerns about Federal Labor's proposed gas policy that was released yesterday.

"We expect tough political rhetoric against the gas export industry to ramp up as we head into an election," Mr Kavonic said.

"The trigger shouldn't be pulled, but with policy being made on the fly, uncertainty surrounding election timing, and perhaps further ministerial changes, we can't rule anything out."

Mr Kavonic said it was "widely accepted" that domestic gas prices are driven by LNG prices.

Revealing his plans for the gas sector, Labor leader Bill Shorten yesterday said a benchmark price would be set by the Australian Competition and Consumer Commission, and if prices rose above that, LNG export controls would be implemented.

Australian Petroleum Production and Exploration Association chief executive Malcolm Roberts said "APPEA can see no justification for the government to apply export controls in 2019 and certainly no justification for making controls - with a price trigger - permanent".

A Santos spokeswoman told The Observer during the past year the company had introduced initiatives targeted at putting more supply into the East Coast market and downward pressure on domestic gas prices.

Mr Canavan is expected to meet senior executives from Santos, Origin Energy and Shell on September 12 in Canberra ahead of a decision on potential curbs.