'Broken' gas market is hurting industry

The plastics and chemicals industry says it has fallen victim to "a broken natural gas market" with manufacturers unable to lock in long-term energy contracts despite Australia's gas export boom.

The plastics and chemicals industry says it has fallen victim to "a broken natural gas market" with manufacturers unable to lock in long-term energy contracts despite Australia's gas export boom.

Ross Pilling, managing director of chemical giant BASF's Australian operations, said federal and state governments needed to act urgently to keep the supply and price of gas steady or risk further job losses in the struggling manufacturing sector.

"A sustainable future for Australian manufacture of plastics and chemicals is achievable," Mr Pilling told the Plastics and Chemicals Industries Association national conference in Melbourne on Thursday.

"But if governments and industry do not take care of a competitive domestic gas supply, ours will continue to be an industry in serious decline."

But in a divergence from the escalating protests from the manufacturing lobby, including Dow Chemical's Andrew Liveris and Manufacturing Australia's Sue Morphet, Mr Pilling said the association did not call for a "reservation" of gas supply for the local market.

Much of Australia's heavy industry is reliant on gas as its primary energy source.

"We have vast reserves of natural gas and there is more than enough to both support a vibrant and sustainable chemicals and plastics industry and meet export demand," Mr Pilling said.

But Paul Howes, national secretary of the Australian Workers' Union, renewed his call for a gas reservation policy and said prioritising the export of gas meant "prioritising the interests of oil and gas companies over the Australian economy and Australian workers".

"Australia's current position of 'extract as much gas as possible, and send it offshore as quickly as possible' is, frankly, a ridiculous policy to maintain in an increasingly energy-constrained world," he said at the conference.

Australia is set to overtake Qatar as the leading exporter of natural gas and Mr Howes said this nullified its inherent advantage of having vast natural gas reserves - all while US manufacturing is revitalised by cheap energy from its shale gas.

"Australian manufacturing - and especially our chemical and plastics sector - requires all the advantages we can muster to compete in a global economy," he said. "Rejecting one of the key advantages we do have, on a matter of abstract principle, is just ludicrous."

The association also called on government to place an immediate moratorium on the approval of any new export LNG plants on the east coast while a comprehensive solution is sought for sustainable domestic gas supply and pricing.

Three plants are being built in Gladstone, Queensland, at a cost of more than $60 billion.

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