East coast gas cartel now wreaking havoc out west

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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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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.