LNG 'choking off supply'

A NEW report confirms that the advent of open slather LNG exports on the east coast is driving up domestic gas prices, choking off supply to domestic industrial users and putting tens of thousands of jobs at risk, according to DomGas Alliance executive director Matt Brown.
LNG 'choking off supply' LNG 'choking off supply' LNG 'choking off supply' LNG 'choking off supply' LNG 'choking off supply'


Anthony Barich

Brown said the Australian Energy Market Operator’s National Gas Forecasting Report 2014 has confirmed what the federal government and producers have been denying for some time now.

The report, which quantifies the decline in domestic gas use in Australia due to the high levels of gas needed for the export market, as well as the challenges experienced in accelerating gas production to meet new demand, was released yesterday.

“The report confirms that even in Queensland, where there are no gas reservations and there have been no barriers to new CSG production, domestic demand is being destroyed by higher prices and a lack of supply as our gas goes overseas to export markets,” Brown told Energy News.

“If repeating the simplistic mantra that ‘more supply and no barriers or reservations’ is really the answer to Australia's domestic gas challenge, producers and others need to explain why it hasn't worked out that way in Queensland.

“We need LNG projects in Australia but we must strike a balance between exports and ensuring our domestic industry has access to the gas it needs. Australian jobs and Australian industry must come first.”

An additional concern, he added, was the report's confirmation that the move away from cleaner natural gas to coal powered generation is set to accelerate even further.

“It is extraordinary that the implications of this for Australian greenhouse emission responsibilities have been completely ignored in the Federal Energy White Paper process,” Brown said.

Excluding LNG, AEMO forecasts total gas consumption to decrease at an average annual rate of 5.2% between 2014-19, while residential and commercial consumption will increase by an average rate of 1.1% driven by new gas connections, despite average use per connection continuing to decline.

Longer-term it’s a different story, with Queensland, New South Wales and South Australia’s maximum demand during winter set to increase to 2034, driven by increasing GPG utilisation as several existing coal-fired power stations withdraw.

Reduced large industrial demand in Victoria and Tasmania, along with a greater reliance on renewable resources reducing GPG utilisation, will see maximum demand decline in those states.

Australian Pipeline Industry Association CEO Cheryl Cartwright said the report was a reminder that Australia had sufficient gas to supply both domestic and export markets and needed “appropriate government policies to encourage development of those gas supplies”

APIA first drew this issue to public attention in its Gas Supply for Australia 2013 report.

Cartwright added that in light of AEMO’s report “governments must act urgently to increase gas supply”, including removing barriers for the development of gas supplies in NSW and Victoria and introducing policy to improve competition in gas supply.

“It can be argued that if the gas supply market was more competitive, production would be increasing in response to the current high prices. It appears this is not happening,” she said.

“It is important to ensure that gas-reliant industries do not become permanently lost to Australia because of a price increase that is expected to ease after 2019.”

Most read Archive



Most read Archive