Block the Santos takeover or commit suicide by gas

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.

Comments

  1. At what stage does negligent execution of duty by our political leadership
    become self serving treasonous duplicity?

  2. But if they don’t allow it who can the current crop of thieving lying weasel politicians go to work for after they leave politics.

    • oliver47MEMBER

      You are right, and methane “leakage” in NG production and distribution has a significant contributor to global warming. Regrettably, the issue has not been well publicised, and now there is political censoring of information about it:
      NASA cancels carbon monitoring research program

      Science 11 May 2018:
      Vol. 360, Issue 6389, pp. 586-587
      DOI: 10.1126/science.360.6389.586

      Summary
      The administration of President Donald Trump has waged a broad attack on climate science conducted by NASA, including proposals to cut the budget of earth science research and kill off the Orbiting Carbon Observatory 3 mission. Congress has fended these attacks off—with one exception. NASA has moved ahead with plans to end the Carbon Monitoring System, a $10-million-a-year research line that has helped stitch together observations of sources and sinks of methane and carbon dioxide into high-resolution models of the planet’s flows of carbon, the agency confirmed to Science. The program, begun in 2010, has developed tools to improve estimates of carbon stocks in forests, especially, from Alaska to Indonesia. Ending it, researchers say, will complicate future efforts to monitor and verify national emission cuts stemming from the Paris climate deal.

      • bolstroodMEMBER

        Thanks for that information Oliver47, yes Censorship is rife,and getting rifer, it is a great threat to freedom of communication.
        The amount of methane leaking from fractured rock is unstoppable. I truly fear for the years ahead, not so much for myself , I am nearly 70, but for all those of my children and Grandchildrens generations .

  3. We need to turn the valves off at the border to queensland. Let these lying mofo’s send off the gas that they said they had plenty of from their own fields instead of raping the rest of the country.

    • Great point.

      Hope the states are allowed to put interstate trade bans on their own resources.

  4. With the price of oil price now above A$105/bbl, contract LNG pricing in September ’18 will be A$12-A$14/GJ. After deducting the cost of conversion and transport to Asia, a domestic equivalent price of about A$9-A$10/GJ should be expected.

    This valuable and key input into the mix of energy that runs Australian society should not be so freely exported. We will need it in 100 years time!

    One of the issues around fair royalty payment for extraction of unconventional petroleum products that has not been addressed is the working of the PRRT on CSG and shale reservoirs. About 80% of the capital cost of developing conventional petroleum reserves is spent prior to commissioning production. Development CAPEX can be offset by project revenue until it has repaid the equity capital invested. However, the capital spent on field development for unconventional sources is neverending! This results in the PRRT account never being repaid so that no royalty is incurred!

    A change is required, to treat ongoing field development spending as an annual expense in the year after it is incurred. This way, only development CAPEX incurred up until a designated commissioning point can be classified as CAPEX for PRRT.