Recall this:
EnergyAustralia, Australia’s third-largest energy retailer, on Wednesday agreed to buy gas from a liquefied natural gas (LNG)import terminal planned by a Japanese-backed joint venture, in the first of several deals needed for the project to go ahead.
The Port Kembla LNG terminal is one of five proposed LNG import terminals that could help meet a looming gas shortage in southeastern Australia, even as the country is set to become the world’s top LNG exporter.
EnergyAustralia is the first customer to sign up to buy gas from Port Kembla, to be operated by a joint venture called Australian Industrial Energy (AIE) consisting of Japan’s JERA and Marubeni Corp and mining magnate Andrew “Twiggy” Forrest’s Squadron Energy.
Over the weekend Reuters reported news that bears upon the Twiggy plan:
JERA, the world’s biggest buyer of liquefied natural gas (LNG), has renegotiated some of its contracts with suppliers to drop clauses that restrict where the cargoes can be sold, in a move to gain more flexibility, an executive told Reuters
Japan’s Fair Trade Commission (JFTC) in 2017 ruled that destination restrictions that prevent the reselling of contracted LNG cargoes breach competition rules.
…“We have been asking sellers to scrap the destination clauses from the current contracts and some of them have accepted our request,” Sunao Nakamura, JERA’s managing executive officer, told Reuters in an interview on Thursday.
It does not say that these deals are with Aussie producers but JERA is an equity partner in Darwin LNG, Wheatstone, Gorgon and Ichthys. It almost certainly trades QLD volumes as well. So the end of destination clauses opens the way for Twiggy to import Aussie gas to Australia.
It would not necessarily be a bad thing to ship WA gas east. If it were done efficiently it could reach end-users for $7Gj, leveraging off WA’s domestic reservation policy, well below today’s east coast $10Gj. The problem is it won’t be done efficiently.
The LNG import cartel will price using Asian gas benchmarks, not West Australian, so the gas will arrive here for $10-11Gj and the difference will be pocketed by Twiggy and Co.
