NSW and Victoria argue fracking policies cannot be easily changed after PM says they are putting energy security at risk

State governments have rejected Malcolm Turnbull’s request to lift restrictions on new gas production, arguing their fracking policies cannot be so easily changed.

Turnbull has written to the New South Wales premier, Gladys Berejiklian, the Victorian premier, Daniel Andrews, and the Northern Territory chief minister, Michael Gunner, asking them to lift their “blanket moratoriums” on new gas production and saying they are putting Australia’s ­energy security and industries at risk.

He has also warned the heads of Australia’s energy companies that the commonwealth may have to impose strong export controls to keep more gas onshore for domestic use, after experts warned of a huge gas shortage next year.

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The Australian Energy Market Operator warned on Monday that next year’s gas supply shortfall could be “higher than expected”, with Australia’s eastern states facing an energy shortfall three times higher than forecast next year, leading to much higher energy prices, particularly for industry, which accounts for almost 40% of gas usage.

The Australian Competition and Consumer Commission also warned of a coming shortfall.

“Blanket moratoriums on new gas development in some states and territories are putting our ­energy security, industries and Australian jobs at risk,” Turnbull wrote to the governments of NSW, Victoria and the Northern Territory.



But Don Harwin, the NSW resources and energy minister, has rejected Turnbull’s criticism.

Harwin says NSW has more gas projects in the pipeline than any other state, while new areas identified for exploration will take years to yield. He says the controversial Narrabri coal seam gas field in northern NSW, which could produce a large annual output, has faced strong opposition from farming and environmental groups over the practice of fracking.

Turnbull has criticised NSW for not moving quickly to approve the Narrabri gas project.

Wade Noonan, Victoria’s resources minister, has also hit back at Turnbull’s criticism, saying Victoria’s ban on fracking was legislated and supported by every political party.

“Our agricultural sector is very important to the Victorian economy and simply attacking the states such as Victoria is not showing any leadership on Malcolm Turnbull’s behalf,” Noonan told ABC radio.

Turnbull has threatened to trigger gas export controls if exporters fail to make more supply available locally and earlier this year started the process to enact it.

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Labor has been calling on the government to start the process up but to make sure it was “fit for purpose”, while Turnbull has been pushing back against the pressure, saying it needed to be a process of “careful consultation”.

“Had we made a determination a week ago, we would have done so on the basis of information which was inaccurate,” Turnbull said on Monday. “If we are not able to receive the assurances from the industry to our satisfaction, and that of the ACCC, then we will impose those export controls.”

Turnbull will speak to gas company bosses again during the week, seeking concrete plans on how they will avoid running out of gas for the domestic market.

The Business Council of Australia believes the gas shortfall problem is due to the states restricting supply.

“Unless we fix that problem we’re not going to fix the entire problem in the medium term,” the council’s chief Jennifer Westacott told ABC radio. “The commonwealth has to look at the means by which it can actually exert pressure on the states.”

Australian Associated Press contributed to this report