Labor Government’s Gas Code Raises Investment Climate Concerns

The Labor government’s mandatory Code of Conduct on gas has sparked controversy, raising questions about the damage to the country’s investment climate.

Treasurer Jim Chalmers says the Gas Code will secure more gas at more reasonable prices for Australian gas users.

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The Gas Code has been registered and comes into effect from today.

The statement says the final Code follows extensive consultation with gas producers and users to ensure it is fit for purpose.

The Energy Users Association of Australia said: “Our expectation is that the Code will make it easier to contract gas in Australia at reasonable prices and with reasonable contract terms”.

However, this may do little to rein in consumer prices and cause irreversible damage to investment confidence.

In December 2022, the government took immediate action to shield Australian gas users by temporarily capping the price of gas. 

According to the Financial Review, domestic gas producers, including Senex Energy, are eagerly awaiting the new rules after introducing price controls last December, causing Senex’s $1 billion Atlas project to be put on hold. 

AGL Energy, EnergyAustralia, and Orora have committed to purchasing gas from Atlas, but Senex CEO Ian Davies states that the project will only be revived if the rules prove effective. 

Consultancy EnergyQuest said: “Given that international prices have also fallen significantly, it can be argued that a large part of these reductions may have happened anyway.”

The company’s Chairman, Graeme Bethune, added that the intervention also incurred the costs of distorting the operation of the market and weakening investor confidence.

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