Japan could now happily export Aussie gas to Australia

Talk about taking the mickey. Asian gas prices have cratered in the past few months, via Bloomie:

Even cheaper prices are available in Europe.

The current Asian price translates to an Australian gas price around $7. Yet, as of Friday, east coast prices are where they have been for six months at $10Gj.

Moreover, the Australian Domestic Security Mechanism (ADGSM) agreement that is supposed to prevent this kind of gouge is based upon the gas cartel sustaining prices at export net-back not the spot price, another $2 lower.  In short, we should currently be enjoying dispatchable east coast gas at $5Gj, half the current price.

The situation is so preposterous that right now Japan could import Australian gas then profitably re-export it to the Australian domestic market.

Remember as well that it is gas that sets the marginal cost of electricity in the National Electricity Market (NEM). So while the election energy debate is trapped in the false binary of whether coal or renewables will cause power prices to go higher, the real culprit is right here, right now making hay completely in the open with no scrutiny at all.

Some government minister that is supposed to be monitoring the ADGSM to press the public case is clearly angling for a post-election gas sector sinecure instead.

Comments

  1. That’s great. The business case for the gas import terminals writes itself!

    If you can buy gas globally for $5 while it is selling here for $10, you’d be mad not to. AustraliaTax is how the smart businesses make money.

    • Alas, no. That’s only while the price is low. Once it rises the effect will reverse and as the AUD falls become catastrophic.

      Much better to toughen domestic reservation and sell the gas to yourself before it ever leaves.

  2. ErmingtonPlumbingMEMBER

    If we put it to the people of Australia in a Referendum that we get OUR gas for the cheapest Global price on offer from these exporters or we seize and Nationalize the lot.
    Leglislation that triggered said Nationalization the instant Gas exporters started Gouging our people with inflated Gas prices.
    The “Sovereign risk” toadies can have their say and put their views forward and the people would still overwhelmingly support such legislation.
    This is a Bigger issue than bloody [email protected] Marriage.
    Let the people of Australia decide.

    • I don’t think you comprehend the power of the Fossil Fuel industry and the money and influence that they would bring. Remember the mining tax that KRudd tried to introduce? Taking a clip on a once in a generation mining boom would have set Australia up for generations. But the power of the Minerals Council via the MSM and the LNP made it look like that tax would be bad for Australians!!!!

      • Clearly the mortgage brokers remember that incident based on advertising I’ve started seeing. Whether they will have any more success than when the banks tried it pre RC who knows though.

  3. Country Labor candidate in NNSW supports gas reservation

    Someone last week posted something about the electricity wholesalers/retailers pushing for some sort of grid charge to account for the solar death spiral – does anyone have detail?

  4. “Japan’s Inpex Tuesday signed a sales and purchase agreement with a consortium of five Japanese utilities for the off take of 4 million mt/year of LNG from its 8.4 million mt/year Ichthys LNG project in northern Australia.”

    from the 2011 S & P article – https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/120611-inpex-sells-4-mil-mtyear-of-ichthys-lng-to-5-japanese-utilities

    Basically the Japanese are selling us our own gas at a more expensive price.

    We may be the lucky country but we sure aren’t a smart one.