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AWU calls on Malcolm Turnbull to renegotiate contracts with gas exporters

Chevron’s Gorgon plant exports 100 per cent of the gas it produces to Asia. Photo: Angela Macdonald-SmithThe n Workers’ unions has urged Prime Minister Malcolm Turnbull to end the “high farce” of exporting record amounts of gas to Asia while domestic prices soar and the energy sector struggles to keep the lights on.
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The AWU wants Mr Turnbull to sit down with liquefied natural gas exporters such as Shell, Woodside and Chevron and renegotiate their contracts to guarantee more of their product stays in to power local industry and ease the cost pressure on manufacturers.

LNG projects like Chevron’s $70 billion Gorgon plant, the biggest single resources project in ‘s history, exports 100 per cent of the gas it produces to Asia.

A single tanker from Gorgon powers 80,000 homes in Tokyo for a year but the company sells no gas into and pays no royalties through the petroleum resource rent tax.

Over the past few years, domestic wholesale prices have nearly tripled from a once steady $3 a gigajoule to about $8 a gigajoule and are expected to rise to $12 a gigajoule, according to Citigroup forecasts.

Gas now costs more in than it does in Japan, South Korea and China. The AWU claims the current policy is “eroding national competitiveness, closing businesses and destroying jobs”.

“We are facing an energy crisis and we need you to act rationally and decisively in the national interest now,” AWU national secretary Daniel Walton wrote in a letter to Mr Turnbull.

” is set to become the world’s largest exporter of gas. While this is a profitable situation for foreign multinational gas companies, allowing unrestricted gas exports has upended ‘s energy market.

“Cheap gas has traditionally fuelled ‘s energy competitiveness and powered downstream manufacturing for decades. Going forward it should be providing abundant and cost-effective carbon reductions as moves to a cleaner energy future.

“As our Prime Minister, the solution to ‘s energy emergency is in your hands: you alone have the power to act in the national interest, to call the multinational gas companies to the table, and to renegotiate our gas export contracts.”

The AWU, which is holding its national conference this week, said Mr Turnbull should ignore the inevitable claims from the business community that revisiting a contract equals “sovereign risk”.

While a gas reservation policy was viewed as political poison just a few years ago, Mr Turnbull last month opened the door to discussion around finding a way to keep more gas in .

“We have seen some steps taken in Queensland in that regard. We’re certainly open to discussing that with the states,” he said recently.

But the Coalition would still prefer to see the gas industry’s wishes prevail and for more coal seam gas in NSW and Victoria to increase supply into the domestic market.

As opposition to CSG remains fierce, AGL has set aside $300 million for a future LNG import terminal.

In that scenario, homes and business in the south eastern states would be powered by natural gas from as far away as Europe or the Middle East.

In 2014, during a political tussle over whether to allow more gas to be exported out of the United States, was raised as a “cautionary tale” of how not to manage resources policy.

All 535 members of the US Congress were provided with a report by Deloitte Access Economics that warned rising gas prices in would dampen manufacturing output by $118 billion over seven years and cost 14,600 manufacturing jobs.

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