Anti-Narrabri report misguided: Santos

SANTOS has dismissed an Institute of Energy Economics and Financial Analysis report – that says the Narrabri CSG project could have “little to no role” in addressing rising gas prices – as “misguided” and flies in the face of expert analyses by the likes of Deloitte and the Australian Chamber of Commerce.
Anti-Narrabri report misguided: Santos Anti-Narrabri report misguided: Santos Anti-Narrabri report misguided: Santos Anti-Narrabri report misguided: Santos Anti-Narrabri report misguided: Santos

Narrabri rig image courtesy of Santos.

Anthony Barich

The IEFFA said on Wednesday that the memorandum of understanding between Santos and the New South Wales government – signed in February to ensure Narrabri would be assessed within specific timeframes – was not legally binding and there would be “great pressure” to maximise gas prices in other markets.

Upon signing the MOU, Narrabri was designated as a “strategic energy project” which the government hoped would entice investors.

“Let’s not forget Santos first obligation is to maximize profits for its shareholders. This would suggest the direction of gas supply would most likely be north, in the absence of a legally binding MOU between Santos and the NSW government,” IEEFA director of energy finance studies (Australasia) Tim Buckley said.

However, Santos general manager energy (NSW) Peter Mitchley told Energy News that Buckley’s report “incorrectly links several unrelated findings and has reached conclusions which are misguided”.

“That is why the Australian Chamber of Commerce, Deloitte and a number of other reputable groups have reached a very different conclusion,” Mitchley said.

“The Narrabri gas project aims to deliver gas into a market where the forces of demand and supply will drive price.

“Any supplier into this market will need to be competitive. The Narrabri gas project is advantaged due to it being a local source of gas and requiring lower transport costs compared to importing gas from interstate.

“Ultimately increased supply will increase competition in the market putting downward pressure on what the price would otherwise have been.

“Experience in the US has shown that increased investment in supply has significantly driven down prices for gas with the US currently experiencing historically low gas prices.”