East coast gas cartel now wreaking havoc out west

Woodside has become Australia’s marginal cost gas producer, via the AFR:

Market fundamentals are stacked against Woodside’s $45 billion brace of West Australian LNG projects: Customers in Asia, perhaps fed up with the premium they are paying for contracted LNG over the depressed spot rate, are proving reluctant to lock themselves into new long-term contracts. They have plenty of choice from the plethora of new projects going ahead overseas.

Then the downward pressure on contract LNG tariffs combined with Australia’s high cost base, is raising questions on likely levels of returns even if they do proceed.

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