Australian LNG exports face restrictions in Labor Party plan

SYDNEY (Bloomberg) -- New liquefied natural gas projects in Australia, which is forecast to become the world’s largest exporter of the fuel, may need to set aside supplies for domestic use under a policy proposed by the opposition Labor Party.

Rising gas demand in Asia is set to lead to higher prices at home, hurting households and businesses, Chris Bowen, the shadow treasurer, wrote in a letter published Wednesday in the Australian Financial Review. If elected, Labor would introduce a policy to ensure that new LNG plants, or significant expansions, are in the national interest, he wrote. 

“Australia’s abundant gas resources could and should be an affordable and relatively clean source of energy for our plants and factories,” he wrote with Scott McDine, national secretary of the Australian Workers’ Union. “Yet this potential competitive advantage is being snatched away by high prices.”

Prime Minister Malcolm Turnbull has called elections for July 2, seeking to end almost a decade of political instability and convince voters he’s best-placed to steer the economy. Standing in his way is union-backed Labor leader Bill Shorten, who’s portraying the coalition as out of touch with average workers.

A Newspoll published by the Australian newspaper on May 9 gave Labor a 51% to 49% lead over the coalition on a two-party preferred basis. The opposition would need to gain a uniform swing of about 4% to win enough seats to form government.

Chevron Corp., Royal Dutch Shell Plc, ConocoPhillips and Santos Ltd. are among energy companies that have built LNG developments in Australia, putting the country on course to overtake Qatar as the largest supplier. Plunging energy prices and surging supplies globally have put future LNG investments in Australia in doubt.

The Labor policy would discourage investment in developing gas reserves, the Australian Petroleum Production & Exploration Association wrote in an emailed statement. “Adding new regulatory risks does not help, especially at a time of depressed prices.”

Under the plan, an independent board would make a recommendation to the Treasurer after evaluating the impact a new project would have on government revenue and local gas consumers. The government would then assess whether any restrictions should be imposed, including reserving some gas for domestic use, Bowen wrote.