The Albanese government’s recent gas supply expression of interest (EOI) process has drawn a muted response from the market, raising concerns over the effectiveness of current policies aimed at securing domestic gas availability. According to David Woods, managing director of Beach Energy, the usual interest from 20 to 30 parties was reduced to only a handful, with price offers too low to warrant engagement. He attributed this to companies withdrawing from the market in anticipation of achieving lower prices in the future.

This subdued market reaction comes amid ongoing tensions between manufacturers and gas producers over proposed government policies. Earlier reports indicated that some manufacturers threatened to terminate contracts, contending that the government’s proposed gas reservation scheme effectively served as an exit clause, and urged a renegotiation of terms. Although Beach Energy has not encountered such contract disputes in its dealings, Woods noted that the lack of manufacturer interest had a chilling effect on investment in new gas supplies.

In May, Beach Energy announced the sale of its interests in the Artisan gas field located offshore in Victoria’s Otway Basin. Woods explained that the company halted its planned $650 million investment in the Artisan and La Bella developments due to the absence of a favorable pricing signal. He warned that this withdrawal could exacerbate gas shortages anticipated later in the decade.

Beach Energy has urged the government to adopt a forward-looking policy approach that does not penalize producers for past investments made since the inception of the east coast liquefied natural gas (LNG) export industry over a decade ago. The company emphasizes that gas sales should not be compelled at prices deemed “sub-economic,” arguing that such measures would undermine investment incentives.

Supporting these concerns, economic modelling by Kroll Project Partners indicates that a 20 percent gas reservation policy could result in net welfare losses amounting to A$2.9 billion annually. The losses derive from forgone export revenues, diminished producer surplus, and inefficiencies in infrastructure utilization. The analysis also forecasts a reduction in Australia’s real gross domestic product by approximately A$653 million per year, with Queensland projected to experience the most significant impact.

The unfolding debate highlights the complexities facing Australia’s energy sector as it seeks to balance domestic supply obligations with the economic benefits of LNG exports, amid conflicting interests between producers, manufacturers, and government policy objectives.