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Applications are now open for $24 million in grants that will incentivise companies to extract more gas and supply it to the South Australian market.

The State Government’s Plan for Accelerating Exploration (PACE) Gas fund aims to increase the supply of affordable gas to local generators in order to put downward pressure on electricity prices for South Australian customers.

PACE Gas projects must be developed within South Australia under a current licence and must be offered to the South Australian market first.

The announcement coincides with the release of the Cooper Basin Outlook report by Core Energy, which predicts an increased demand for gas in Eastern Australia in the coming years.

This increasing demand represents a significant need for the development of new gas supplies, with South Australia’s Cooper and Otway basins offering the best exploration, development and low-cost opportunities.

Mineral Resources and Energy Minister Tom Koutsantonis said the grant scheme was a key component of the State Government's plan to put downward pressure on energy prices for South Australian consumers.

"The levers available to us are limited because the previous Liberal Government sold our power assets, but we can take steps to increase both competition in the market and the supply of affordable gas to South Australian gas-fired generators," Mr Koutsantonis said.

"I invite gas companies both in South Australia and those operating in other jurisdictions to take advantage of this opportunity and partner with the State Government to unlock more of our world-class gas reserves.

"There is a lack of available gas in the national market, a situation made worse by the decision in Victoria to ban onshore gas exploration and development and a similar moratorium in NSW.

"These grants are an added incentive for companies affected by those decisions to come and do business in South Australia, where we leave the approval or otherwise of onshore gas projects to expert, independent regulators, rather than to politicians.

"Our vast gas resources could ensure energy independence for South Australia and create many jobs in our economy, while at the same time help South Australia transition further towards a carbon constrained future."

The State Government recently announced a package of measures designed to put downward pressure on South Australian energy prices.

In addition to the PACE gas grants, the package includes using the procurement of 75 per cent of the State Government’s electricity requirements to incentivise the entry of a new player into the market, increasing competition.

At the most recent COAG energy council it was also agreed between SA and NSW to expedite a project to construct a new interconnector between the two states.

For more information visit http://petroleum.statedevelopment.sa.gov.au/latest_updates/pace_gas