Turnbull Channels Trump With 'Australia First' Gas Export Curbs
(Bloomberg) -- Australia’s Prime Minister Malcolm Turnbull is taking a leaf out of U.S. President Donald Trump’s “America First” playbook.
Just days after announcing a crackdown on foreign workers and tightening citizenship rules, Turnbull announced an effort Thursday to restrict gas exports by energy giants to protect domestic supply.
“Australian demand, Australian businesses, Australian jobs, Australian families have to come first,” Turnbull told reporters as he detailed plans to possibly limit exports by firms including Royal Dutch Shell Plc, Santos Ltd. and Total SA. “It is fundamental action needed to protect the national interest.”
Faced with growing support for fringe parties such as the anti-immigration One Nation, Turnbull has been seeking to shore-up support for his Liberal-National coalition government with his own populist agenda. The more nationalist approach may have the unintended consequence of deterring much-needed foreign investment.
“There is a heightened level of political risk now in Australia which means we are a less attractive place for investment,” according to Saul Kavonic, lead Australia analyst at energy consultant Wood Mackenzie Ltd. Turnbull’s move “is likely to have unintended consequences for energy security and for the economy as a whole.”
As concern mounts that liquefied natural gas exports to nations such as Japan and South Korea have contributed to a tripling in Australia’s wholesale gas spot price in the past two years, the government announced on Thursday that from July 1 a “targeted licensing system” will be activated for exports if there’s a shortfall for Australian customers.
Turnbull said it was “utterly unacceptable” that exports had caused the domestic market to be drained of the gas it needs.
“It is ridiculous for us to be on the edge of becoming the largest LNG exporter in the world and not to have enough gas for our businesses, for our households, for industries,” he said. The policy should halve the price of gas for industrial users on the east coast to about A$10 a gigajoule from current market rates of up to A$20 a gigajoule, according to Turnbull.
Industrial users of gas in Australia applauded the move. The federal government’s intervention had become essential because of a failure in the country’s energy markets, BlueScope Steel Ltd., Australia’s top steelmaker, said in a statement.
Gas producers said they would work with the government, but cautioned against export sanctions. APLNG, one of three Queensland LNG plants and owned by Origin Energy Ltd., ConocoPhillips and China Petroleum and Chemical Corp., said intervention would not lower prices or increase supply.
Since his center-right government was returned with a razor thin majority in an election nearly 10 months ago, Turnbull has failed to gain traction with voters.
Parties such as Pauline Hanson’s One Nation, which opposes the sale of key assets including farms and power companies to overseas investors, collectively hold the balance of power in the Senate and have blocked government legislation aiming to rein in a budget deficit. Hanson is a self-declared fan of Trump and backs many of his populist policies, including stepping away from the Australia-backed Trans-Pacific Partnership free-trade deal.
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