Via Domain:
Australia’s lucrative exports of natural gas are being hit by a global supply glut and the coronavirus crisis destroying demand, with dozens of cargoes either anchored offshore or idling at sea as Asian buyers delay deliveries.
While oil prices begin showing signs of recovering from historic lows, traders and analysts say the worst may be yet to come for the gas industry as demand collapses in key Asian markets and storage facilities approach capacity. Unlike the world’s major oil producers, many liquefied natural gas (LNG) exporters are yet to curtail output, meaning the fallout could be longer and more severe than oil’s crash.
“The global gas market is still extraordinarily oversupplied,” said Graeme Bethune of Australian consultancy EnergyQuest. “And that pressure is now intensifying.”
…Australian LNG exports fell by seven cargoes in May as Asian buyers delayed deliveries and sought to minimise contract purchases.
It is estimated that 41 cargoes of Australian LNG were either anchored offshore, sailing around in circles or travelling at slower speeds while they await destination instructions.
Sadly for Australians, the recovering Brent oil price has already driven the local contract gas price (which benchmarks 95% of east coast volumes) to $8Gj.
So, while we literally can’t give the gas away in Asia, at home we’re still paying triple historic rates for it because the gas cartel is busy sailing it around in circles in the Coral Sea instead of supplying it.
This is a massive market failure plain and simple.
The answer is equally clear: gas reservation. There is a deal between Centre Alliance and the Morrison Government, in return for passing the $158bn tax cuts package, to install a price trigger in the Australian Domestic Gas Security Mechanism (ADGSM) by linking it to JKM net-back. Today that would deliver gas to the east coast for $1.50Gj.
Yet, instead, it is sailing around in virus ghost ships to protect cartel margins as the deal is sidelined by the alternative of digging up the Narrabri gas reserve so it can supply Sydney and Melbourne at $10Gj while poisoning NSW for thousands of years.
Has the Domain reporter picked on this? No, he just interviews the lobby of course:
“As the International Energy Agency forecast last week, global demand for natural gas will continue to grow after this year’s decline,” said Andrew McConville, chief executive of the Australian Petroleum Production and Exploration Association.
This is rubbish. The glut is vast and endless:
Almost as big as we are corrupt and stupid.
