In a submission to the Australian government’s Eastern Australian Gas Market Study, Dow Chemical of Australia has reportedly urged the Department of Industry to apply a “use it or lose it” policy to the country’s onshore gas reserves.
It is understood that Dow has walked away from significant investments in Australia because of gas supply frustrations. The company reportedly said the hoarding of gas reserves is at the heart of domestic market disruption in Australia.
The company feels gas producers have accumulated gas reserves over a number of years for the sole purpose of exporting them as LNG. It believes gas reserves are now managed predominantly for the international energy trade.
The submission reportedly urges policies for faster onshore gas development, including time-related licence conditions and more access to production and reserves data. It also suggests moves to address the monopoly character of gas pipelines and to use floating LNG royalties to fund onshore pipeline infrastructure development.
Dow’s theme is not new. The company issued a fact sheet in September 2012 entitled “Australia’s Natural Gas Opportunity” in which it said the scramble to fill LNG capacity for Australian projects under development would tie up gas reserves, precipitating a domestic gas shortage that would lead to a sharp rise in domestic gas prices.