Is it time to re-visit the gas to Queensland project?

Readers will have observed that when I write about the Australia-Papua New Guinea relationship I am often frustrated and disappointed.

Today I'm more than both - I'm angry!

We hear from the federal government daily that we face a critical shortage of gas - with prices for industry and households to rise by up to 50 per cent. At the same time power prices will rise by even more.

This alarming situation surely justifies a look again at the proposed PNG gas to Queensland project which was abandoned around 15 years ago. When Prime Minister Albanese visits PNG next month, his PNG counterpart James Marape might invite him to seriously consider re-examining the proposal.

I had a minor role advising the PNG Government on the project. It really received a boost when PNG Prime Minister, Sir Michael Somare, met with Queensland Premier Peter Beattie in 2003. Both governments unreservedly committed to helping the project become a reality.

Sir Michael firmed a high-powered ministerial task force to work with the project's proponents AGL Australia and Petronas, a large Malaysian energy company, to get the project designed, secure environmental and native title approvals, and importantly sign up customers, principally industries along the Queensland coast from Cairns to Gladstone.

That was the initial modest proposal. A spur to provide gas to Gove in the Northern Territory was suggested but that was a long shot and frankly an unhelpful diversion.

Discussions were also held on a possible extension of the pipeline to Brisbane, regional Queensland and New South Wales and Victoria.

AGL was even considering extending it to boost the supply of gas at its Moomba facility in South Australia!

At the same time there were two other significant gas development proposals in Australia and Papua New Guinea.

Three companies were in negotiations with the Queensland and Australian Governments to build pipelines from the Surat Basin to the port of Gladstone carrying coal seam gas.

I held the view at the time the proponents of the three Queensland CSG pipelines were not opposed to the PNG Gas to Queensland as their proposals involved the export of all production overseas with no gas reservation for domestic use.

The PNG proposal would only supply the domestic Australian market.

I recall at the time the per unit cost of CSG gas was about FOUR times the landed cost of gas from PNG.

The AGL consortium signed up a significant number of commercial customers - actively supported by senior PNG Ministers.

The construction cost was around $3.5 billion - with a construction timetable of about three years.

So why did it fall over so abruptly?

Firstly, there was a fear and smear campaign on two fronts. The first was that there were claims native title approvals on Cape York (for an underground pipe) would be difficult to secure. This was never tested and ignored the significant royalties etc that would be available to landowners.

The second, and I found this to be a racist claim, was fear that the reliability of supply, including Country risk issues, could not be guaranteed.

Indeed, one Australian politician told me it was just too great a risk that "natives" in PNG would disrupt the project!

But it subsequently became apparent the real undermining of the project came from the American dominated PNG Gas Project consortium.

They wanted the PNG Government to focus on the PNG Gas Project; on securing approvals and the funding of the state and landowner equity.

It defies comprehension they genuinely believed there was a big enough resource to service both projects. That was complete nonsense and ignored the reality there were also substantial stranded gas resources even closer to Northern Australia that could be tapped for the Gas to Queensland project.

I suspect the US led consortium wanted all of PNG's gas to be exported via its pipeline and vessels via negotiated contracts.

The Gas to Queensland Project was unique. It involved a direct agreement with Australian companies - and included the not insignificant derivatives that could value-add and be converted for fertiliser production in particular.

The abandonment of the project took away a very significant addition to the Australia Papua New Guinea relationship.

It has also denied Australia a reliable, cheap and abundant supply of pure natural gas, something so desperately needed today!

I attach a short but compelling speech by the then PNG High Commissioner to Australia, Sir Charles Lepani. It sets out the benefits to both countries of the project with clarity.

Prime Minister Marape could at least invite his Australian counterpart to work with the PNG Government to have the project re-evaluated.

It is worth nothing less!