Outgoing, independent Senator Rex Patrick has denied a gas crisis, calling the government’s cancellation of France’s multi-billion dollar submarine contract a “total policy failure.”
With just 20 days to go, the South Australian senator targeted gas companies that “made a killing” and said the nation should adopt Western Australia’s gas reservation policy to protect stocks.
“There is no gas supply crisis,” Patrick told the political podcast Democracy Sausage on Tuesday evening.
“Australia makes more gas than you can stab with a stick.
“We have an abundance of them; approximately two and a half times the domestic demand is actually met from Australian sources.
“The problem is that most of that gas is exported; much of it is contracted.”
Patrick said gas producers exporting liquefied natural gas had pledged to the government that the domestic market would remain unaffected.
But to meet overseas contracts, the companies “went into the domestic market and basically sucked all the gas.”
Like Western Australia, camera icon Senator Rex Patrick said the nation should adopt a gas reservation policy. Credit: Included
As a former adviser to former South Australian Senator Nick Xenophon, Mr. Patrick helped negotiate Australia’s domestic gas security mechanism, which allowed the government to pull a trigger to control how much went abroad.
But in 2017-19, he said that gas companies kept supplies tight, keeping prices high.
“This is a cartel that we are working on to make sure they can get as much price as possible for the gas,” he said.
In 2019, as a senator, the government agreed to reconsider the mechanism to include a price aspect and promised him in writing to introduce a gas reservation policy, which he described as the “right solution”.
Mr. Patrick said Australians had a right to their gas at fair prices and that the national interest should precede any commercial interest.
“The gas companies promised the Australian government and the public at the start of the gas trains that they would not interfere with the domestic market,” he said.
“They have broken that promise, soo the Australian government is open to a solution.
“They are making a killing here, and they will stand their ground and try to protect it. But we need to have politicians standing up to that and for the Australian public and implementing this gas reservation policy, as we see in Western Australia.
“That is the only correct outcome of the current crisis.”
Camera icon Patrick said Australia made ‘more gas than you can stab with a stick’. Credit: News Corp Australia
According to the Western Australian model, 15 percent of the extracted gas must be returned to the domestic market, so the state has a constant supply.
“They pay between $5 and $6 per gigajoule, while on the East Coast, we see people paying $40 per gigajoule, and in the spot market, it rises to somewhere between $400 and $800 per gigajoule,” added Mr. Patrick.
The outgoing senator also targeted the government’s cancellation of a major defense contract for French submarines at an expected cost to taxpayers of up to $5.5 billion, describing it as a “total policy failure”.
The Collins submarines would be replaced by another conventional submarine fleet to be built in South Australia by the French naval group under a $90 billion contract.
But the French program was scrapped last year when Morrison’s government decided to pursue nuclear-powered submarines instead under the AUKUS partnership with the United Kingdom and the United States.
“It’s just incredible that we’ve come here. I’m also alarmed that along the way, no one has been held responsible for the delay we have in capacity for the Royal Australian Navy from a national security perspective or for the taxpayers. Money that has been spent,” said Mr. Patrick.
He said nothing stopped Australia from buying an “off-the-shelf” design and building it here for much cheaper.
“If you didn’t change too much, you could build a submarine from, I think, around 2024, and you’d have it in the water by 2026-27.”