I must be mad, via the AFR:
The Andrew Forrest-backed NSW gas import terminal proposed for Port Kembla will have its regulatory approval period fast-tracked by six to eight months, after the state government declared it a critical infrastructure project because of its importance for energy security.
The decision is “a powerful demonstration of the Berejiklian government’s commitment to solving the state’s critical gas security challenges”, Mr Forrest said on Sunday, noting LNG imports were targeted to start arriving at the $200 million-$300 million terminal in early 2020.
“Australian manufacturers have asked us to work with them to solve their future gas supply issues and skyrocketing prices, which threaten their viability.”
Gas prices are still high. But it must be remembered that the Coalition government has already succeeded in halving them with its Australian Domestic Gas Security Mechanism (ADGSM).
This week the Asian LNG price is $14.23Gj for spot and $13.42Gj for contract. Twiggy must add the cost of losing 10% for regasification, the amortised cost of his plant and a margin for his LNG import business. If operating today his delivered price would be well north of $15Gj. Today the east coast gas price is roughly $9Gj.
The only way that Twiggy Forrest can make money is if he can secure gas supplies in WA, exploiting its domestic gas reservation, at contract prices of $4-5Gj. WA suppliers might agree to sell him the gas at local contract prices if they knew that the extra demand would lift the WA price, increasing their profits. But why would the WA government agree? That’s why they have domestic reservation in the first place.
If Twiggy has to buy the gas on the open market then he must destroy the ADGSM to turn a profit.
