East coast gas farce doubles

Yes, somehow the farce has doubled in just a few days. Last week it was Twiggy Forrest importing gas to NSW. Now it’s AGL to Victoria:

AGL Energy has struck several deals for its proposed liquefied natural gas import jetty at Crib Point in Victoria, which could help deliver more gas to Victoria and South Australia.

The energy company (AGL) has signed development and gas transportation agreements with APA Group and works, lease and berthing and jetty agreements with the Port of Hastings Development Authority.

Chief executive Andy Vesey says the Crib Point LNG import jetty project has “significant potential” to enable the company to deliver a new flexible source of gas supply to the southern states of Australia.

“This will deliver liquidity, increasing competition to put downward pressure on wholesale prices and provide much needed capacity and long-term security of supply,” Mr Vesey said in a statement on Tuesday.

Without additional gas supply, Victoria could face a shortfall in peak daily winter demand in 2021 and a general shortfall from 2022, according to the Australian Energy Market Operator’s Victorian Gas Planning report, released in March.

Why would AGL import gas to Australia given that shortage has driven electricity prices so wild that the AGL share price has been transformed from a staid utility to tearaway growth stock?

I’ll tell you why. It knows that importing LNG will keep the local gas price high – and therefore electricity prices high – so it is insuring its rentier profits. Imported gas includes the cost of liqulifaction, shipping and regasification when local gas does not. Domestic reservation is thus more effective for lower prices by some $2-4. But if reservation is displaced by imports then up the prices will go.

AGL and Twiggy Forrest are betting on, and ensuring, the destruction of the east coast domestic reservation regime.

Comments

  1. Seems locked in now.

    Ain’t no government going to wade in to regulate anything when “the market” is delivering a “solution”!

    Ouch. Well played, agl and forrest.

  2. THey are just trying to muscle their way into the value chain…they see a prosperous few decades ahead of ticket clipping if they can put their own shiny pipes and storage tanks in between the upstream producers and Australian users’ meters… and they will lie and steal all day long to ensure they can muscle in before the competition.

  3. Time for a #RoyalCommission into the East Coast gas export debacle !!?? This federal government is fast becoming the joke of Australia’s 21st century

  4. H&H Don’t forget the proposal also requires burning circa 12-15% of gross gas in the process PLUS the amortisation and operational costs of the plant, shipping, regas etc that you listed.

    I doubt Monty Python at their finest could come up with something like this “export liquid gas at a loss so you can import same at a high price and sell back to yourself”

  5. I am all for a virtual import terminal. Govt funds it; uses it to break cartel. No need to liquify anything, just to force prices and break the mooted cartel

  6. I’ve heard of the Aussie Tax but this is fawked!
    Locking in uncompetitiveness for many industries, so much for a diversified economy, the cancer grows bigger.

  7. My daughter carries candles for the Festival of Light,
    The fridge is full of beer and I’m alright, and….. (c’mon, everyone sing the chorus!)

    It doesn’t matter to me!
    It doesn’t matter to me!
    I’ll sit home and watch youse all on my colour TV.

    Cricket? Football? Pfffft!! APATHY is the great Australian sport ladies and gentlemen!

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