Pakistan shows Australian gas consumers the way

Imran Kahn, Javed Miandad, Wasin the Wrecker, the Rawalpindi Express. Australians are used to looking to Pakistan for fine cricketers and tearaway pace bowlers. What we are not used to is Pakistan showing us the way on how to manage commodities.

Yet that is exactly what Australia’s relentlessly gouged large-scale gas consumers need to do today. As ludicrous as it sounds, energy-poor Pakistan has just struck a deal with Qatar that Australian bulk gas consumers will look upon with envy.

Via Dawn:

  • Pakistan has signed a new 10 year LNG deal with Qatar.
  • It will substitute a 2015 deal at a 31% discount with higher volumes.
  • The price is 10.2% slope of Brent.

Why and how could this possibly be of use to Australian bulk gas consumers?

Regular readers will understand the long and sordid history of the east coast gas export cartel which is in bed with the scandalously corrupt Morrison Government. The cartel captured most east coast reserves and overbuilt LNG export hubs in QLD. Since 2014 it has shipped too much gas, often at losses, deliberately to tighten the local market and make it up with gains here.

The local gas cartel charges bulk customers for Aussie gas at a 14% Brent slope. So there is a huge spread between that and the price being paid by Pakistan to import Qatari gas. If Aussie bulk consumers can establish LNG import teminals then they arbitrage this spread:

Over the cycle, gas will be $1-2Gj cheaper for bulk consumers using fully imported Qatari or Asian spot gas than at the prices currently on offer for gas extracted down the road. This includes shipping and regasification costs.

With the Morrison Government utterly captured and pursuing the Gas Unplan to embed persistent shortages and higher prices, LNG imports are now the only way left to break the cartel stranglehold.

David Llewellyn-Smith
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Comments

  1. Cynical snake

    Except for the minor detail that the cartel will bankrupt anyone actually attempting this by undercutting them.
    I don’t see how it plays out any other way.
    For this reason don’t expect anyone to stump up the money and start building…

  2. ” If Aussie bulk consumers can establish LNG export plants then they arbitrage this spread”

    * LNG import terminals

  3. Qatar is a good sail from Botany Bay too… sadly.

    Domestic gas reservation for Australia is the only solution for the good of current and future generations’ energy security and affordability. Never give up!

  4. NoodlesRomanovMEMBER

    The contract is for an MOQ of 500MMSCFD, take or pay. That would be the largest domestic gas contract ever signed in Australia, right now you could get the same price point if you showed up talking those volumes and terms.

    So, to compare apples with apples, you could propose that the Australian gov negotiate a similar arrangement with ‘the cartel’ and then you’d have something to complain about if it didn’t come off.