Australia’s Energy Policies Cause Significant Ripples in the Industry and Among Its Trading Partners

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Australia’s energy price limits and proposed export curbs threaten investment and the country’s relationships with major trading partners.

In response to growing concerns about the domestic supply, Prime Minister Anthony Albanese’s administration suggested drafting laws granting them the authority to impose export restrictions.

It put interim price controls on uncontracted gas in December and an obligatory code of conduct to ensure gas was sold for a “reasonable price.”

Analysts and businessmen warn that investors in liquefied natural gas and trade relations with countries like Japan and South Korea could suffer significantly due to these initiatives. According to the consultancy EnergyQuest and official trade statistics, Australian gas made up more than 42 per cent of Japan’s LNG imports last year, 34.5 per cent of China’s, and 22 per cent of South Korea’s.

“There is growing concern that Labor is undermining commitments to trade partners about gas exports. That should be a red flag for the government,” said Saul Kavonic, an energy analyst with Credit Suisse. 

“International companies will now see Australia as a country of increased sovereign risk,” Kavonic added.

According to the Australian Bureau of Statistics, the value of Australia’s LNG exports topped A$90.8bn (US$61.9bn) in 2022, up 83 per cent from 2021, as a result of a spike in gas prices following Russia’s full-scale invasion of Ukraine.

In an interview with Australian media, the Japanese company Mitsui warned of the “unintended consequences” of short-term actions. The Japanese embassy in Canberra has stated that it is actively following the issue.

According to a representative of South Korea’s Ministry of Commerce, Industry, and Energy, the country’s worries are overstated because it primarily enters into long-term contracts with Australia to provide it with LNG.

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