Via the AFR:
NSW manufacturers say relying on LNG imports or gas from the Northern Territory to satisfy the state’s needs will send them out of business and have stepped up calls for the government to get behind Santos’s Narrabri coal seam gas venture, which secured two prospective customers this week.
The NSW government’s support for the Port Kembla import terminal in preference to developing the state’s own gas resources has disappointed and frustrated manufacturers, who say they will never be able to afford imported fuel. The $250 million terminal, backed by mining billionaire Andrew Forrest, secured state development consent on Monday.
Right they are. Even with the Asian LNG price cratered today to $7Gj, NSW won’t see any for less than $10Gj and the price will only rise from there. Futures markets are pricing Asian gas at $12Gj by H1 2020 and if the AUD falls to 0.60 cents on RBA cuts then that price will be…wait for it…$16Gj.
LNG imports are not only not the answer, they’re absolute madness, embedding an energy shock to be triggered the very moment that the currency is supposed to work as a shock absorber.
The astounding lunacy of this doesn’t become fully plain until one considers a few further facts. Those producing and selling the gas in Asia, like Shell, ConocoPhillips or others have extensive LNG portfolios around Australia and the world. The gas that Australian LNG importers buy will be provided by one such firm and do we really think that they will go to the trouble and expense of shipping gas from somewhere as distant as the US? No!
They’ll use the gas at hand. That means the great likelihood is that Aussie gas will be frozen in QLD, shipped out to the reef and sailed south to NSW and VIC regasification terminals.
The hilarity of this circumstance only becomes fully apparent when we consider that VIC is large net gas exporter itself, to QLD, for the use of the very same LNG cartel.
In short, we will:
- extract gas from Bass Straight for $2Gj;
- sell it to the LNG exporters in QLD for $7Gj;
- liquify and ship it out for $2Gj;
- ship it in and regasify it for $2Gj.
End users in VIC and NSW will thus watch their own state’s $2Gj gas slip by their front door, do a fantastic $9Gj rentier round trip, and return for $11Gj a month later.
It’s not just manufacturers. Every household and business east of Ayre’s Rock pays for this higher gas plus the follow-up astronomical impact on power bills, because gas-fired power sets the marginal cost in the National Electricity Market. This is a $15-20bn per annum scam.
And while the east coast is stuck in this Shakespearean economic tragicomedy, that would cause amusement among the oligarchs of the most intensively abused Banana Republics, the west coast has gas reservation and rock bottom gas prices:
And so I ask you, what is the answer? Is it to import our own exported gas at 550% mark-up to enrich a few rat-cunning corporations?
Or is it simply to keep it for $2Gj via reservation in the first place?