Australian gas producer Santos says it will continue to supply the domestic market with gas, despite being able to fetch triple the price in Japan.
Santos plans to supply gas to the domestic market as it pushes ahead with boosting lucrative exports.
Chief executive David Knox said the $18.5 billion his company has invested in Australian gas would not have occurred if gas exports had been restricted.
The gas producer can sell one unit of gas into the Japanese market for around $14.50, while the equivalent amount sold into Sydney, Melbourne or Adelaide fetches around $4, he said.
“If we weren’t allowed to export gas from this country then we would be reducing our gas supply,” Mr Knox told a Committee for Economic Development Australia (CEDA) meeting in Adelaide.
“We’re bringing in new technology, we’re bringing in people, we’re bringing in expertise to unlock our resources and had we not been able to export it, or had we been restricted in those exports, we wouldn’t have been able to do those things.”
He said Santos was still investing heavily in its largest asset, the Cooper Basin in central Australia, to increase supply.
“I now have a choice to supply the domestic market or the international market and we’ll do both of course,” he said.
Mr Knox expects Australian east coast gas prices to rise from the current range of $3 to $4 to around $6 to $9 over the next few years, but he predicts prices will fall if Australia exploits more of its gas resources.
Santos, which has agreements with 700 Queensland landholders and 40 in NSW, says customers such as Japan and Korea are eager to lock in secure gas supply agreements at a reasonable price.
University College London professor Paul Stevens told the CEDA meeting that implementing a gas reservation policy could remove the incentive for companies to find gas if they were forced to sell into the domestic market.
Last week Federal Industry Minister Ian Macfarlane ruled out introducing a national gas reservation policy, despite NSW facing a gas shortfall in 2016.