Via The Australian:
The developer of a major LNG import terminal, backed by mining billionaire Andrew Forrest, has warned that NSW and Victoria risk running out of gas by 2022, with the industry paralysed by regulatory uncertainty and low oil prices delaying urgent investments needed to cover a supply shortfall.
…However, the developer said the gas industry needed clearer signals to bring new supplies to market before it could take a final investment decision planned for the September quarter.
“The longer there is confusion in the market, the less likely we will see final investment decisions on any new projects, including possibly ours,” AIE head Peter Mitchley told The Australian.
“From an engineering perspective, we’re all ready to rock and roll. We are in discussions and have detailed term sheets with many potential customers. But what’s happening is they’re not pushing it to the signing rights, so I can’t sanction the project yet.”
The NSW import plant aims to supply 100 petajoules of gas annually, equivalent to 75 per cent of the state’s demand. It is looking to strike binding five-year deals with its prospective east coast customers, with EnergyAustralia the only named buyer so far.
The shortage is 100% real. Via the AEMO, here’s where we are today:
And here is where we’re going fast as Bass Straight gas runs out:
We’re going to need 200Pj of new gas soon or drop demand by that much.
In the absence of a huge push towards energy storage, which would be sensible but has an iceblock’s chance in hell politically with carbon pricing dead, we need more gas.
We could take the sensible and cheap, national interest path by slapping reservation on the QLD export cartel. Or, in lieu of that, produce much more expensive gas in southern states, or import it.
Despite having an agreement with Centre Alliance to implement said reservation in return for $158bn in tax cuts, the lying Morrison Government is headed rapidly towards the local production option, largely via the Santos Narrabri project, which is now free to produce gas with no environmental safeguards after rolling the NSW parliament last week.
The problem is, it is very expensive with gas delivered into Sydney at $10Gj and even higher into VIC. It may well be even higher given there’ll be no new competition and STO is part of the export cartel.
The alternative path of gas imports is much better given it adds more players to compete with the cartel. Gas can today be bought in Asia for around $3Gj spot. So it can be resold here for $4-5Gj on spot. On contract, it is more expensive at $7Gj today.
The glut in Asia is immense so prices will only rise slowly from here.
In the end, the only rational answer is hammering the cartel with reservation on existing operations. But given we no longer have a country, or parliaments at the federal or state levels, and don’t do public interest policy, then we will need LNG import terminals to prevent the cartel from strangling us completely.
Even though, yes, we’ll quite often be importing our own gas.
Go Straya.
