(Corrects PIX tag in slug)
By Harry Pearl
SYDNEY, March 18 Australia's deputy prime
minister said he would support lifting bans on coal seam gas
(CSG) drilling if landowners were given a bigger slice of
royalties, a significant policy shift as the country scrambles
to avoid a looming energy crisis.
Australia, with an abundance of natural riches, was supposed
to be a world energy power on its way to becoming the largest
global exporter of liquefied natural gas (LNG), but the
government instead finds itself battling to explain why the
country is unable to keep the lights on at home.
A series of massive blackouts in South Australia state has
already caused major embarrassment and the national energy
market operator has warned of a domestic gas crunch from 2019
that could trigger further broad power outages and industry
Deputy Prime Minister Barnaby Joyce's support to lift the
CSG ban - if landowners were granted royalties - could be a
game changer as his right-wing National Party has traditionally
opposed such a move.
"By paying a royalty it means the value of a farmer's land
increases as a result of gas extraction, rather than
decreasing," said Joyce, who is also the agricultural minister,
in comments confirmed by his office on Saturday.
Manufacturers have long complained of tight gas supplies and
soaring prices as producers have focused on supplying gas to LNG
plants that have locked in 20-year export contracts.
Restrictions on drilling CSG have added to supply
constraints. Under pressure from green voters and farmers, the
state of Victoria has banned onshore gas developments, including
fracking, and New South Wales state has prevented developments.
Australia's power supply problems made international
headlines last week when Tesla Inc boss Elon Musk
offered to save South Australia, the country's most
renewable-energy dependent state, from recurring blackouts by
installing battery storage worth $25 million within 100 days.
Prime Minister Malcolm Turnbull also this week floated
spending up to A$2 billion ($1.5 billion) to expand the Snowy
Hydro power scheme and held crisis talks with major gas
producers, including Exxon Mobil Corp and Royal Dutch
Shell, who have large export contracts.
(Reporting by Harry Pearl; Editing by Jane Wardell and Tom