Critically short gas supplies are making local manufacturing difficult or even impossible, Australia's competition watchdog has warned, as a gas "crisis" puts jobsi in the sector at risk.
As one of Australia's oldest brick manufacturers said it may shift production offshore due to soaring gas prices, Australian Competition and Consumer Commission chairman Rod Sims warned on Tuesday that industrial gas users are facing a serious problem as gas prices soar in the face of tightening supply.
Sims told the Australian Domestic Gas Supply Outlook in Sydney that many industrial users have no alternatives to gas, which can make up between five per cent and 40 per cent of their input costs.
"How can these companies invest and plan with such high and uncertain gas prices and with considerable supply uncertainty," he said.
"At worst, plants will close and jobs will be lost purely as a result of the current gas crisis.
"Australia often makes it hard to be involved in manufacturing. We are now making it extremely difficult if not impossible for some."
Brick maker Brickworks on Tuesday announced it is considering a move overseas due to skyrocketing local gas costs, while packaging company Orora accused liquefied natural gas exporters of holding manufacturers "hostage".
Brickworks has already seen gas prices across its east coast operations surge 76 per cent and managing director Lindsay Patridge said the company is considering making bricks in Malaysia, New Zealand, East Timor or South Korea.
"Obviously, we don't want to go there, but what people have got to realise is that if you've got no energy, you've got no choice," he said.
Packaging company Orora's chief executive Peter Dobney accused large liquefied natural gas (LNG) exporters hold prioritising export markets above all else.
"Are we going to suffer at the expense of exporting a bit more LNG? Because that's what it's going to come down to," he said.
Australian Industry Group principal national policy adviser Tennant Reed said the era of cheap gas was over, and some group members had seen "apocalyptic" price rises on wholesale supply contracts, going from $7 to $22 per gigajoule in the past year.
Fears of a domestic shortfall come as South Australian government announced a $550 million plan to build two new gas-fired power plants and an 100MW battery to guarantee energy security for the state, which suffered a statewide blackout in September.
Mr Sims said gas supplies had been affected by three factors: a recent trebling of demand due to the growth of Australia's LNG exports; lower-than-expected global oil prices affecting the pricing models of export projects; and state moratoria on gas exploration and developments amid local opposition.
Australian Petroleum Production and Exploration Association chief executive Malcolm Roberts blamed the domestic supply shortages on state government policies.
"Governments can't expect to have readily available, cheap gas and restrict upstream development, either through crude mechanisms such as bans and moratoria or through very, very high regulatory costs," Dr Roberts said.
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