The Australian Government’s mandatory Gas Code of Conduct has commenced today, with a two-month transitional period allowing companies to adapt to new conduct provisions, record keeping and reporting obligations.
Part of the Energy Price Relief Plan announced in December 2022, the code will ensure that east coast gas users can contract for gas at reasonable prices and on reasonable terms.
Key elements of the Code include:
- a price cap, initially set at $12/GJ, designed to anchor wholesale contract negotiations between gas producers and buyers;
- an exemptions framework to incentivise producers to commit more gas to the east coast gas market in the short term and facilitate new investment to meet ongoing demand in the medium term which supports the ability for east coast gas users to access gas at reasonable prices and on reasonable terms;
- transparency obligations to increase visibility of the amount of uncontracted gas to be produced, and when producers will bring that gas to the domestic market; and
- conduct provisions aimed at reducing bargaining power imbalances between producers and gas buyers and establishing minimum conduct and process standards for commercial negotiations.
AWU is celebrating the introduction of the mandatory code, saying it has long warned of the dangers of linking domestic gas prices to international prices, as the export gas industry opened up in the 2010s.
“With multinational gas exporters prioritising maximising profits from the export market, Australia was exposed to punishingly high domestic prices and potential gas supply shortfalls,” the union said.
“We have long argued that our nation’s abundant natural gas reserve should be used to benefit all Australians, not just generate super profits for a handful of multinational gas corporations,” said incoming AWU National Secretary Paul Farrow.
“Essentially, a domestic gas reservation scheme has been achieved and this will save thousands of Australian jobs and benefit millions of Australian households.
Mr Farrow noted the ACCC’s enforcement of the new code would be critical.
“We have to hold the major gas producers accountable for the vital role they are privileged to hold within Australia’s economy with which they’ve been entrusted,” Mr Farrow said.
“We call on the ACCC to be vigilant on imposing harsher regulatory measures should any corporation fail to comply.
“We also urge the government to commit to maintaining this framework for at least five years, regardless of the outcomes of the proposed 2025 review. Such consistency will foster a predictable policy environment, giving stakeholders the confidence to make informed decisions that will ultimately strengthen our national gas industry.”
