Empire's Beetaloo assets not subject to Australian Domestic Gas Price Cap

• On 9 December 2022, Australian Treasurer Hon Dr Jim Chalmers MP announced a temporary gas price cap of $12 / GJ for new domestic wholesale gas contracts for 12 months

• Gas from undeveloped fields is NOT subject to the price cap

• Empire’s Beetaloo Sub-basin assets are NOT subject to the price cap

• More detail needed on ‘reasonable pricing provisions’

On 9 December 2022, the Australian Treasurer, in a joint media release with the Minister for Climate Change and Energy, the Minister for Resources and the Minister for Industry and Science (“the Ministers’ Joint Media Release”), announced measures to limit the impact of high gas prices on Australian consumers. The measures include a temporary price cap of $12 / GJ for new domestic wholesale gas contracts by east coast producers for 12 months for gas sourced from current operational fields. A voluntary code of conduct for the gas market will become mandatory, and a reasonable pricing provision will be included.

The gas price cap does not apply to gas from undeveloped fields. In relation to this exemption, the Treasurer stated: “New sources of supply from undeveloped fields will be exempted from the cap, and instead be covered by the reasonable pricing provision, to ensure incentives to invest in new supply are maintained.”

A consultation period for the mandatory code of conduct, including the reasonable pricing provision, will be open until 7 February 2023. Clarity on the detail and intended function of the reasonable pricing provision will be critical in determining future investment decisions on supply of gas into the domestic market. Empire intends to make submissions during the consultation period to highlight the important role that the company’s Beetaloo Basin gas resources can have in providing material additional supply to the critically short east coast gas market in years ahead while generating broad economic benefits for the people of the Northern Territory and Australia. 

To view the full ASX Announcement and the full text of the Ministers’ Joint Media Release, click here

Source: Empire Energy Group