Via Gottiboff comes Andrew Liveras:
Liveris accepts as a given that Australia wants to reduce its emissions and to honour its gas exports contracts. If it doesn’t honour those contracts it will do great long-term harm to the nation.
…Liveris plan starts with the requirement that New South Wales needs to exploit its gas and Victoria needs to lift its ban on gas exploration and development.
…But the Liveris plan goes much further. He believes that Australia should link both the West Australian gas fields and the Northern Territory gas fields to the eastern states, probably via Moomba…The recent advances in pipe technology make these long-term pipe projects an economic infrastructure investment and he would be happy to recommend them to the Saudi Arabia Public Investment Fund.
East-west pipelines could work given WA has domestic reservation keeps its wholesale price at $4Gj versus $11Gj in the east. But it needs to be carefully thought through and I can’t see why WA should get a higher gas price just because the idiotic east won’t use the same policy. As well, government should build this at a low rate of return not some new foreign rent-seeker sitting on critical national infrastructure.
Fracking NSW and VIC will not help because the gas comes out at roughly today’s prices anyway, though it will stop future price hikes and it a lot better than LNG imports.
It will not do Australia “great long-term harm” to renegotaite gas export contracts. That happens all of the time:
- Edison renegotiated RasGas contract on price and volume in 2012;
- PGNiG renegotiated QatarGas contract on volume in 2014;
- Petronet renegotiated RasGas contract on volume and price in 2015;
- PetroChina renegotiated QatarGas contract on volumes in 2015;
- JERA renegotiated RasGas contract on volume and price in 2016;
- Pakistan renegotiated QatarGas contract on volume sand price in 2016;
- Japan declares multiple contracts illegal owing to “destination clauses” in 2016, following Europe from a few years earlier;
- Petronet renegotiated Exxon-Mobil Gorgon contract on volume and price in 2017;
- Woodside Pluto contracts renegotiated on price in 2017;
- Kogas renegotiated Woodside contract on price in 2018;
- GAIL renegotiated Gazprom contract on volume and price in 2018;
- India in talks with Cheniere and Dominion to renegotiate contracts in 2018.
Liveras is definitely on the right track but the simplest solution remains to just force the gas cartel to deliver gas at $6Gj. This is an anti-trust not sovereign risk issue. If they fight then threaten them with expropriation.
They’ll fold.
