Industrial energy buyers on the east coast are seeing a fresh deterioration in the choice and terms of gas supply offers, only weeks after the federal government’s deal with Queensland LNG exporters for additional local supplies.
Businesses seeking firm gas supply contracts are often finding only one retailer with gas available to sell to large customers, said John Bartlett, senior manager at Energetics, which sources more than $250 million in gas and $2 billion in electricity each year for large energy users.He said it appears the extra gas arising from the early October deal is being sold to the highest priced markets such as power generation, leaving industrial customers still short.
“The reality is that gas is being directed to more profitable channels, suggesting that the commitments from energy retail executives amount to very little,” said Mr Bartlett.
… industrial energy buyers fear the relief will turn out to be only temporary and say they have seen little evidence of an improvement in contract offers since the deal, despite the pledges by Shell, Origin Energy and Santos to make more gas available for use on the east coast.
Hoocoodanode, via the AFR:
Certainly, onerous conditions around contract offers have not softened, said Tennant Reed, policy adviser at Australian Industry Group, which represents a number of industrial gas buyers.
“We should be seeing more parties able to make offers, but all the feedback I’ve had is that its 95 per cent “take-or-pay” and tough conditions around maximum demand remain the norm,” Mr Reed said.
Spot gas prices have rebounded:
As Asian region prices have taken off on spot and contract:
The former is seasonal, the latter is the oil bull run. Plus the AUD has fallen. Export net back is today nearly $10Gj.
And herein lies the problem. The spot market is trading around export-net back at $7Gj. Moreover, the gas cartel can rightly claim that the outrageous local price of $10Gj for contracts fair enough, even on the basis of the domestic gas reservation mechanism. And as the AUD falls that will only get worse and worse.
The mechanism needs to target or fix an AUD wholesale price or it is worse than useless.
