Via The Australian:
Leading gas market analysts Wood Mackenzie and EnergyQuest are tipping east coast gas prices to rise above $10 a gigajoule, despite federal government and gas industry moves to divert more supplies to domestic markets.
…Wood Mackenzie said east coast prices were forecast to head to between $10 and $13 a gigajoule.
…Mr Kavonic said higher prices were being driven by declining cheap supply in the Cooper Basin and offshore Victoria, and by increased gas demand for power use. New gas supply sources are proving far more expensive to develop than those that have given the nation cheap supply since the 1960s.
…EnergyQuest said it expected Victorian gas prices to rise between now and 2025.
Yep. This is why the Santos buyout must be blocked by FIRB. The Cooper Basin assets are part of the STO suit that is the last cheap terrestrial gas in eastern Australia. Some of it is also under a cloud as part of the third party gas acquisitions that were sucked up by Curtis Island after it lied about having sufficient reserves before construction:
As Santos worked toward approving its company-transforming Gladstone LNG project at the start of this decade, managing director David Knox made the sensible statement that he would approve one LNG train, capable of exporting the equivalent of half the east coast’s gas demand, rather than two because the venture did not yet have enough gas for the second.
“You’ve got to be absolutely confident when you sanction trains that you’ve got the full gas supply to meet your contractual obligations that you’ve signed out with the buyers,” Mr Knox told investors in August 2010 when asked why the plan was to sanction just one train first up.
“In order to do it (approve the second train) we need to have absolute confidence ourselves that we’ve got all the molecules in order to fill that second train.”
But in the months ahead, things changed. In January, 2011, the Peter Coates-chaired Santos board approved a $US16 billion plan to go ahead with two LNG trains from the beginning….as a result of the decision and a series of other factors, GLNG last quarter had to buy more than half the gas it exported from other parties.
…In hindsight, assumptions that gave Santos confidence it could find the gas to support two LNG trains, and which were gradually revealed to investors as the project progressed, look more like leaps of faith.
…When GLNG was approved as a two-train project, Mr Knox assuredly answered questions about gas reserves.
“We have plenty of gas,” he told investors. “We have the reserves we require, which is why we’ve not been participating in acquisitions in Queensland of late — we have the reserves, we’re very confident of that.”
But even then, and unbeknown to investors, Santos was planning more domestic gas purchases, from a domestic market where it had wrongly expected prices to stay low. This was revealed in August 2012, after the GLNG budget rose by $US2.5bn to $US18.5bn because, Santos said, of extra drilling and compression requirements.
Bass Straight gas is also cheap but trades directly off the artificial tightness of the east coast market that resulted.
In 2001, Peter Costello rejected the Shell takeover of Woodside on national interest grounds because it was thought that Shell may not seek the highest prices for Aussie gas owing to international portfolio of assets.
How, then, can it be in the national interest today to hand the key assets in the east coast gas gouge to a foreign owner – materially Chinese owned – to do what they will applying discriminatory pricing to locals for gas?
We need domestic reservation to break the Curtis Island gas cartel not to be selling stakeholder reserves to foreign interests that will sustain the gouge and protest all the more about sovereign risk when we apply the fix.