Queensland gas supply deal enacted

PERTH (miningweekly.com) – Queensland’s liquefied natural gas (LNG) producers have enacted a deal struck with the federal government to provide sufficient gas supply to the domestic market in 2018 and 2019, signing an industry-government agreement.

Shell, Origin Energy and Santos in September agreed to supply an additional 54 PJ to 107 PJ of uncontracted gas to the domestic market, depending on demand, to ensure that there was no supply shortfall in 2018 and 2019.

The deal came after the Australian Competition and Consumer Commission (ACCC) and the Australia Energy Market Operator (AEMO) both warned of major gas shortages starting in 2018, with the ACCC projecting supply shortfalls of up to 55 PJ on the Australian east coast in 2018, with the AEMO placing the expected shortfall at between 54 PJ and 107 PJ, while the 2019 shortfall is expected to be between 48 PJ and 102 PJ.

Australian Petroleum Production and Exploration Association (Appea) CEO Dr Malcolm Roberts said this week that Queensland LNG producers would ensure eastern Australia would not run out of gas despite new forecasts of much higher than expected demand.

Furthermore, the industry has also volunteered to provide the ACCC with comprehensive information on their contract offers.

“Producers recognise that the east coast market, like other contract markets, lacks transparency,” Roberts said.

“Providing the ACCC with detailed information in real-time about contract offers and agreements will bring unprecedented transparency into the wholesale market.  We look forward to seeing similar transparency across the entire supply chain.”

Prime Minister Malcolm Turnbull thanked the three producers for their commitment, saying that it was vitally important to ensure Australian jobs and to ensure that Australians had affordable and reliable energy.

He said that the three producers ensuring that there would be no supply shortfall in 2018, saved the government from placing restrictions on LNG exports.

Roberts, meanwhile, said that the risks to the east coast market had been averted because of the international investment in new supply from coal seam gas (CSG).

“Queensland CSG already accounts for almost half of the gas used on the east coast and almost 90% of the known resource. Developing similar resources in southern states; however, continues to be stalled because of unscientific bans and unnecessary restrictions.”

Roberts noted that the states of Victoria and New South Wales had been granted a reprieve from the consequences of their policy failures, courtesy of the Queensland gas industry, adding that they should use this opportunity to support local gas projects.

“As the ACCC warned last week, gas customers in the southern states are already paying a 25% premium for their gas due to the bans and restrictions imposed by their governments.

“The situation facing Victoria is particularly challenging. The state is facing a forecast shortfall of 116 PJ in 2018, just as production from local offshore fields begins to decline. Yet onshore gas remains off-limits. It is policy madness.

“More gas supply and more gas suppliers is the only sustainable way to meet long-term demand and put downward pressure on prices. The interests of gas customers must come before the demands of anti-gas activists.”