Malcolm Turnbull is under pressure to prove his gas market intervention has teeth after the major liquefied natural gas producers cast doubt on his claim that export controls would slash wholesale prices by as much as half and guarantee domestic supply.
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The political rumble over gas and its contribution to Australia will continue on Friday as the largest multinational LNG companies prepare to face a Senate inquiry into corporate tax avoidance.
The hearing in Perth, which will be attended by senior executives from Chevron, Shell and BP, will focus on declining receipts from the petroleum resource rent tax - the only royalty paid by offshore projects - at a time when the Australian LNG sector is poised to become the world's biggest.
On Thursday, as local manufacturers cheered the Prime Minister's "Australia first" promise of reliable and cheaper domestic gas, the LNG industry openly questioned whether prices would fall and supply would increase as a result of the government's "alarming" intervention into the market.
On Thursday, Mr Turnbull told ABC radio that the current quote for wholesale gas, at $20 a gigajoule, was much higher than that paid by Australia's main customers such as Japan and "should be around half that or less" as a result of new powers to restrict exports to guarantee domestic supply.
But he appeared to walk away from that prediction later in the day, pointing out that households should not expect gas bill relief to that extent and clarifying that the aim was to bring domestic prices back to export parity.
"This is not saying that all gas prices will be halved as a result of these changes," he said.
Mr Turnbull said the reason Australia paid more for our own gas was that exporters were "drawing out of the domestic market" to satisfy international supply contracts.
Just a few years ago, local industry enjoyed gas prices that were a half to a third those paid by their Asian competitors, reflecting Australia's abundance of fossil fuel resources.
Recent data suggests Japanese industry now buys Australian LNG at a "landed price" of about $10 to $11 a gigajoule, which includes shipping, while in the United States industrial buyers pay as little as $4 per gigajoule.
Mr Turnbull's initial boast that prices could be halved was leapt on by Opposition Leader Bill Shorten, who called on the Prime Minister to outline a time frame, saying it would be little more than "hot air" if gas companies did not confirm relief was on the way for domestic industrial buyers.
"Without the gas companies confirming that, what Mr Turnbull is saying is just hot air, just words," he said.
"I want these same gas companies to put their hand up and say, 'Yes, gas prices will halve - Malcolm Turnbull is right.' If the gas companies won't verify Mr Turnbull's extravagant promises of halving gas prices, Turnbull has a case to answer to the Australian people."
On cue, the LNG exporters refused to endorse Mr Turnbull's view and even suggested export controls could make the supply problem worse.
The single biggest exporter, Australia Pacific LNG, owned by Origin Energy and ConocoPhillips, questioned the government's approach and whether it would deliver results on price or supply.
"APLNG does not support additional regulation such as export permits, as these sorts of interventions will not increase supply or decrease price in the near or long term," said chief executive Warwick King.
As investors sold off shares in LNG producers, Santos, which has been blamed for "sucking up" domestic supply to fulfil international contracts, said it was seeking clarification on how export restrictions would work and how prior proposals put to government by the industry were being considered.
The leading industry group, the Australian Petroleum Production and Exploration Association, described export controls as "alarming".
"Restricting exports is almost unprecedented for Australia. At a time when we need billions in new investment to create more gas supply, any intervention that creates sovereign risk is alarming," said the association's chief executive Malcolm Roberts.
The association repeated its belief that the key to easing the supply crisis was for states to open up more coal seam gas fields rather than bow to rural protesters and environmentalists with moratoriums such as the one in Victoria.
The Australian Pipeline and Gas Association criticised the use of "quick fixes" over a holistic approach to energy security.
But industry was delighted.
Australian Industry Group chief executive Innes Willox said: "This is a very positive step ... it is just a pity that it has got to this stage, where a lot of businesses are facing incredibly steep rises in their gas and electricity bills, and we hope that over the time ahead those bills can come down."
With the petroleum resource rent tax to come back under the microscope on Friday, the government will face calls to immediately release the review by former Treasury official Mike Callaghan into the scheme, which is not predicted to deliver any significant revenue for decades.
Mr Turnbull said Mr Callaghan's findings would be "published soon" but Treasurer Scott Morrison has not said whether they would be made public before the budget.
There remains doubt as to whether the government will take on the multinational LNG sector in the budget after fierce industry lobbying over recent weeks to head off any change to the system.
In October last year, Fairfax Media revealed Qatar, which Australia is set to overtake as the world's biggest LNG exporter, would reap $26.6 billion from its sales based on a flat royalty based on volume.
On the same volume of exported gas, the profits-based petroleum resource rent tax would deliver just $800 million to the Australian public coffers.
