Shell pauses taking bids to supply extra gas for Australia's east

 (Reuters) - Shell said it had paused accepting bids for gas under a plan to boost supply for Australia's populous east coast in 2023 and 2024 while it assesses the government's proposal to cap gas prices.

The government on Friday announced a 12-month cap on gas and coal prices to keep a lid on energy bills for households and businesses hit by soaring costs largely due to Russia's war in Ukraine.

In a more alarming move for gas producers, the government also proposed a long-term "reasonable pricing provision", which would be based on the cost of production plus an agreed profit margin after the one-year price cap expires.

Shell said the proposal might change the terms of the "Heads of Agreement" commitment the three east coast liquefied natural gas (LNG) exporters - Australia Pacific LNG, run by ConocoPhillips, Gladstone LNG, run by Santos Ltd and Queensland Curtis LNG, run by Shell - made in September to prevent a forecast supply crunch.

Under that deal, Shell's QGC arm had offered gas for 2023 and 2024 for domestic customers through an expression of interest (EOI), but on Tuesday said it was pausing the process.

"Pausing the EOI process was not an option we wanted to take," a Shell spokesperson said in an emailed statement. "However, QGC needs to consider whether the design of the current EOI will meet the new regulatory requirements."

An Australia Pacific LNG spokesperson said APLNG would continue to honour its commitments under the Heads of Agreement, "which we recognise plays an important role in giving confidence around the security of gas supply to the market".

Parliament will hold a special session on Thursday to vote on the plan to cap uncontracted gas prices at A$12 ($8.09) per gigajoule (GJ) and coal prices for power producers at A$125 per tonne for one year. ($1 = 1.4830 Australian dollars)

(Reporting by Renju Jose in Sydney and Sonali Paul in Melbourne; Editing by Josie Kao)

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