From the AFR today:
Even now that Canberra has backed away from triggering the export controls, Tuesday’s deal is seen having a similar effect as Queensland’s exports of gas will be essentially limited to long-term contracts.
Gas and petroleum exploration and the production, treatment and marketing of natural gas, crude oil, condensate, naphtha and liquid petroleum gas; transportation by pipeline of crude oil.
Australia is the world’s biggest LNG exporter and is set to be the biggest by 2020.
North Asian spot LNG prices rose to $US8.348 per million British thermal units this week, up from $US6.187 four weeks ago.
The current Asian spot price is roughly equivalent to $10.70 a gigajoule, well above spot prices in the eastern states on Tuesday, where Victoria was at just $5.01 and Sydney at $6.75, around their lowest since early January.
Under the “Heads of Agreement” signed in Canberra, the Queensland LNG exporters will offer enough gas to meet a forecast 54 petajoule shortfall on the east coast in 2018, and a 48 PJ gap in 2019. Roughly as much again of potential additional demand would also be covered.
This would obviously be an excellent outcome were it true, representing a transfer of wealth from Asian economies to Australia. It should prompt much more gas reservation.
But alas, it very likely isn’t true. Q4 sees spot price spikes every year in North Asia as they enter a Winter heating inventory build, so the pattern is thoroughly seasonal. There is also large Curtis Island maintenance shutdowns forthcoming so that’ll be adding a little pressure.
Still, it goes to show that if reservation were large enough, even so large that Curtis Island shut down completely, Australia would be better off!
