COMPETITIVE ACCESS TO AUSTRALIAN GAS MARKETS—IMPLICATIONS FOR EXPLORATION AND DEVELOPMENT

Abstract

Access to profitable markets is one of the key factors influencing the incentives to explore for and develop gas reserves. Recent reviews of gas markets in Australia and attempts by gas buyers and sellers to negotiate interstate gas sales have focused attention on the need to remove barriers to competition and trade. Possible barriers include policies pursued by some state governments that restrict interstate sales of gas and limit its use in some markets. Structural features of gas markets in Australia, including monopoly control over pipeline access, are also potential barriers to new gas discoveries competing for markets. A number of recent developments and proposals could influence access to gas markets in Australia. The most significant are moves to establish a framework for open access to interstate pipelines. These developments could encourage further gas exploration and development, by reducing uncertainty about market access and giving gas producers and large consumers the opportunity to directly negotiate sales on their own negotiated terms.