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    East Oz Gas Prices Lower on More Supply

Summary

Australian domestic gas prices are now lower, but could be lower still in some states if they lifted the ban on hydraulic fracturing, argues upstream group Appea.

by: William Powell

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Natural Gas & LNG News, Asia/Oceania, Corporate, Political, Regulation, Market News, Infrastructure, Liquefied Natural Gas (LNG), , News By Country, Australia

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East Oz Gas Prices Lower on More Supply

Australian domestic gas prices have fallen thanks to new supplies, said the Australia Petroleum Production & Exploration Association (Appea) August 2. But it made the point that the shortages of gas in Australia were often down to state governments, which have imposed bans or moratoria on gas production.

“Governments wanting lower gas prices have the solution to hand – follow the Northern Territory’s lead and support the safe, responsible development of the resources in their state," said Appea.

Responding to the release that day of the Australian Competition and Consumer Commission’s (ACCC) latest Gas Market Inquiry 2017-2020, it said the report confirms that east coast gas prices have fallen sharply since early 2017, due in large part to new supply brought into the market by gas producers. Earlier in the year, the prices were higher than netbacks from Asian LNG markets. The report also confirms the latest AEMO supply-demand forecasts, which should remove any lingering concerns about the possibility of a supply shortfall in 2019, Appea said.

Appea CEO Malcolm Roberts said prices have eased since early 2017, with most price offers now in the range of $8-11/gigajoule. Producers – particularly LNG producers – have made significant volumes of additional gas available to the local market. The October 2017 agreement between LNG producers and the Commonwealth ensures that any uncontracted gas is offered to domestic customers first, he said.

“In the past year, we have seen significant announcements from Arrow Energy, Shell Australia, Senex, Cooper Energy, Strike Energy, Gladstone LNG, Australia Pacific LNG, Origin Energy, Santos, ExxonMobil and BHP to bring on new supply.

“The report also restates the ACCC’s concern that customers in New South Wales and Victoria will continue to pay more for their gas because of state government restrictions on developing local gas resources. Importing gas from Queensland can add $2 to $4/GJ to the price paid by consumers in the southern states."

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