And now India pays half what we do for Aussie gas

Via the Financial Post:

India has renegotiated the pricing of liquefied natural gas (LNG) imported from Australia’s Gorgon project to save more than Rs 10,000 crore over the life of the contract. Exxon Mobil Corp has agreed to charge 13.9 per cent of the prevailing Brent oil price at the port of delivery rather than previously decided 14.5 per cent of the oil rate at the port of loading, a source privy to the development said. “Besides changing the indexation, LNG pricing will be on DES basis rather than FOB previously decided,” he added. Delivered ex ship (DES) is a trade term requiring the seller to deliver goods to a buyer at an agreed port of arrival. Under FOB, the buyer has to make shipping arrangement.

At $50 per barrel oil price, Gorgon LNG, whose supplies started in January this year, would have cost $7.25 per million British thermal unit at the port of loading. Adding another $1 for transportation would have led to delivered price of $8.25 in the old contract. In the new formula, Gorgon LNG delivered at Indian port will cost USD 6.95 per mmBtu. “Happy to share good news that India has, yet again, been able to address the long-term price issue of LNG from Gorgon to suit Indian market,” Oil Dharmendra Pradhan said in a tweet.

This is all a part of the LGN contractpocalypose that is moving forward at a good pace owing to the enormous glut in global LNG:

The irony being that Asian customers don’t need the gas that we’re sending them. Hence India will now enjoy Aussie gas at $8.70Gj while here it still costs $17.50Gj.

Let me just remind you of how crazy this is. As the last of the LNG megaprojects comes online, we’ll be exporting roughly 4200Pj of gas per annum and the east coast shortage is roughly 200Pj, 4% of exports.

Yes, a gas reservation mechanism covering just 4% of volumes would kill energy bills and restore the Australian decarbonisation project.

I am…lost for words.

Comments

  1. Somebody get the ATO onto this.

    If Apple was selling iPhones into Australia at twice the global price, they’d be smashed by the tax office.

    I’m sure there’s an angle here.

    • You’re not paying attention. There’s nothing to tax. The progressive write downs and depreciation of the LNG white elephants is ensuring no local taxes are paid. At least the ATO killed he transfer pricing rort.

      • I’m being largely flippant. At least in the case of Santos, it’s “Australian owned” (at least listed), and so the bizzarre geographic discrimination in the pricing of product probably doesn’t add up to tax avoidance.

        That said, I don’t know how they have structured their gas operations – perhaps there is some profit dump offshore somewhere.

      • H&H you do forget to liquefy the gas you burn about 12% plus some more in shipping. So price of gas out of the ground would be ~ $2.49 USD/GJ (+6.95 -1 shipping -~3 liquefaction div 1.12 = $2.63 mmBTU). Or has CVX already written off the entire Gorgon plant? We must be the laughing stock of the world community. “Did you hear the one about the incompetent Aussies ……. a little post politics consulting and ……..”. Not even Monty Python at their best could come up with this stuff.

  2. Can everyone pls post this article to their Facebook page. The local press obviously isn’t covering it so it’s the only way to get it out there.

  3. India builds nuclear bombs, ICBMs, launches satellites and has a moon landing program while millions go hungry, have no access to running water or decent medicine and are illiterate, and we’re helping them by giving them cut price gas at the expense of Australians, who are paying ridiculous prices for their gas and electricity and getting next to nothing for the pilfering of their natural resources by companies that are mostly foreign owned, even those people think are “Australian”.

    The stupid country. There cannot be any doubt.

      • The Fat, Stupid Country for allowing our Corrupt Parliamentarians sell us out over and over and over again. We are the white trash of Asia. .
        The laughing stock of Asia. Asia’s Bunny. We have earned their contempt by selling out our own in a way they’d never do. It’s not their fault, it’s our’s,. We are fat, loud retards and our leaders are traitors.

    • reusachtigeMEMBER

      Those losers in their society are untouchable. They must be left alone. Cows are way more important and must be looked after first!

    • There’s a reason for everything St J. In the case of gas we couldn’t sell it here for less because that would be inconsistent with government policy (all sides) which is to ensure we pay more than anyone else for everything. Vegemite is shipped to the UK & sold cheaper than here. Third party suppliers to Amazon can’t sell through Amazon and ship here because they already have agreements with people here to ensure the gouge is maintained. Online buying would be more expensive still if they could find a cost effective way of charging GST on everything. The only exception (compared to Europe) is fuel. Even the [email protected]@@@wits in parliament know that that would finally tip it.
      As for India, I thought most of them were over here on 457 visas replacing Australians in the IT industry?

      Ours is not to reason why, ours is but to pay sky high..

  4. ‘Yes, a gas reservation mechanism covering just 4% of volumes would kill energy bills and restore the Australian decarbonisation project.’. Thank you for stating the extent of the problem so clearly – unlike our wonderful MSM which is only interested in reporting football fanatics this morning. Beats me why the government can’t mandate that the local price must be the cheapest international price… other than corruption of course.

    • The Traveling Wilbur

      But… but… that would be a straightforward​, simple, change that if put into effect would actually do something. Are you crazy?

      Didn’t you know the PM’s next step in the war against energy companies is to build a website to host the gas wholesalers’ invoices so that the public has transparency over the reasons why their electricity bills are so high?

      Gas Watch. I hear it will be big with the fluid-dynamicist-crowd.

    • Dodgydamo,

      The solution has been clear for the last 2 years – actually it is about 6 years since I first outlined the concept.

      https://theglass-pyramid.com/2017/03/10/no-fracking-way-a-national-export-volume-auction-is-the-solution-to-the-australian-gas-crisis/

      But we can’t do this because we must maintain the fiction that intervening in a market to make it work is impossible.

      1. Set an export volume and every thing else can only be sold into the domestic market

      2. Auction off the rights to the export volume to the highest bidder.

      If they want it badly enough they will bid for some of the export volume.

  5. 4200PJ is a lot of gas!

    Tassie’s entire annual consumption outside of our gas power station is only 2.5PJ. The power station depends on how much we use it, but it’s generally another 7PJ.

  6. Why doesn’t the East Coast negotiate to buy West Coast gas. It sounds like we could get a very good deal.

    Shell predicts that over the next two decades Floating Storage Regassification Units will be alternative to onshore facilities. Australia, particularly the East Coast is going to have to look to the future. As the authors of the following document say, pro-renewables government subsidies and climate change policies are crowding out conventional supply and this holds the prospect for an unreliable energy market going forward.

    Report: Gas Prices – where to from here?
    https://www.aie.org.au/data/AIE_GasPrices_OGW_Snow_6March2017.pdf

  7. reusachtigeMEMBER

    No one cares, there’s great shows on TV! No one talks about gas at the BBQs or parties, it’s just not a nice subject. The Bachelor on the other hand, that show is ace!