Federal Government to rethink gas market policy

THE future of gas in Australia will be put under the microscope by the Australian Government after Resources Minister Gary Gray told a Brisbane conference there would be a fresh look at the national gas market.

Its aim would be to work out the ebb and flow of Australia's gas needs. Risks to gas supply will also be part of the brief.

Mr Gray told more than 3000 industry representatives at the APPEA 2013 conference the government did not support chunks of gas supply being mandated for domestic use only.

"In our view, it would create uncertainty and deter investment in new gas supply," Mr Gray said.

"However, it is vital to make policy decisions on the basis of a strong understanding of what is actually occurring, and the potential implications of government interventions in the market."

The Domestic Gas Market Study will strengthen the government's Bureau of Resources and Energy Economics - or BREE - which leads research into Australia's mining and energy sectors.

It was not the only revelation from Mr Gray's morning speech.

The former Woodside advisor said 31 areas across six regions - in waters off Northern Territory, Western Australia, Victoria and the Ashmore and Cartier Islands - would be used for petroleum drilling.

Similar to a system introduced in 2012 by the Queensland Government, companies will nominate to drill in these areas through a competitive cash bidding system.

The areas are considered safer bets for the industry, with government already largely able to confirm the potential of these regions for drilling.

The top bidder will be selected by the Federal Government after nominations close before the end of June.