The Asian gas spot price has now cratered to $6.90Gj. Based on the current Australian Domestic Gas Security Mechanism (ADGSM) that should have the domestic price at roughly $5Gj. The east coast gas crisis should be over.
Instead the spot price is at $9.50Gj while the Government and ACCC do NOTHING to enforce their own agreement with the gas cartel. Why?
Because “the market” is coming to the rescue, via the AFR:
…the news, first reported on Wednesday in The Australian Financial Review’s Street Talk column, that EnergyAustralia has signed on the dotted line to take at least 15 petajoules (PJ) of imported gas lands both a resounding reinforcement of the iron ore legend’s foresight and, even more importantly, of the commercial logic that fathered the import project.
The project in question is owned by Australian Industrial Energy, a vehicle half-owned by Forrest’s privately held energy business, Squadron Energy, and two very large and influential arms of Japan Inc, JERA and Marubeni.
…AIE has never claimed it would be the bearer of cheap gas…From day one the project proponents have floated landed gas prices of $9-10 a gigajoule (GJ) as a starting point for discussions.
Yet were the ADGSM simply enforced today the price would be HALF that. That price could easily be embedded in the mechanism permanently. Asia simply does not need all of that QLD’s gas, now or ever. JERA and Marubeni are two huge buyers of Australian export gas, only to sell it straight back with mark-ups.
The LNG export disaster has been a swindle from the get go, siphoning some $20bn out of the east coast economy to gas and power firms via collapsed market structures. Piling an LNG import cartel on top locks down the heist such that it will now be $20bn per annum forever, even without price rises. Over twenty years let’s call it $400bn. Add interest and it is a one trillion dollar heist.
It is the single greatest theft in the history of the world.