Australian gas users have suffered as a result of the export of natural gas from Queensland and will suffer more if state governments persist with bans and moratoriums on the mining of coal seam gas, a major review has found.
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The report of the year-long Competition and Consumer Commission review to be released on Friday finds that the development of three Queensland liquefied natural gas projects from 2010 triggered unprecedented changes in the east coast gas market.
Previously priced low because of a limited Australian customer base, gas could be transported from anywhere on the east coast through pipelines to Queensland, where it could be exported for a higher price.
"Many industrial users reported that they either could not get offers for gas supply during this period for 2016 and beyond or received few offers at high prices with less flexible terms and conditions," the report finds.
It says the offers they did receive were often at sharply higher prices on strict "take it or leave it" terms.
The report recommends that the owners of pipelines be subject to stricter regulations and that gas explorers and producers be required to report consistent public information on gas resources.
"The regulatory regime is not fit for purpose for the gas pipeline sector and pipeline pricing is significantly unconstrained," the commission's' chairman, Rod Sims, says in a letter accompanying the report.
"The east coast gas market remains opaque. Confidential bilateral negotiations remain the norm for both gas supply and transportation contracts. The lack of consistent, publicly available data on the sector is an impediment to participants, investors and policy makers."
The report rejects suggestions that the east coast of Australia set aside a certain proportion of gas for domestic uses as happens in Western Australia, saying that while in the short term that might reduce prices for domestic users, in the long term it would weaken the incentives for exploration.
Moratoriums and other restrictions in New South Wales, Victoria and Tasmania preventing or impeding coal seam gas development should be removed and be replaced with consideration on a case-by-case basis.
"These reviews should take account of a range of considerations, including the costs and benefits to the domestic gas market and to industrial users in particular, as well as environmental and social concerns."
Resources Minister Josh Frydenberg convened a video conference with state and territory energy ministers to discuss the findings on Thursday and said he would be pressing for decisions when they next met in July.
