If you must import LNG, the government should do it


This is painful to watch.

While it negotiates a contract to acquire gas imports, Venice Energy has reached out to Asian developer Atlantic Gulf & Pacific Company regarding a joint venture or supply agreement.

A possible agreement would hasten the construction of the LNG import terminal in South Australia, which is currently regarded as a crucial temporary fix for an east coast gas shortage anticipated in 2025.

Venice Energy anticipates being among the pioneers in LNG importation into Australia. Origin Energy failed to get significant funding for the South Australian LNG import terminal project, which would have enabled the nation’s biggest gas retailer to finance the infrastructure expansion.

It is thought that Origin is unlikely to be interested in AG&P’s alternate proposal.


Potential suitors are in discussions with Venice Energy.

According to people with knowledge of the matter, AG&P, which is currently primarily owned by US company Nebula Energy and has a minority stake from Osaka Gas, has a real stake in the business.

In an attempt to reduce risk, AG&P has recently invited Australia’s biggest retailers to join a consortium for the purpose of bidding, even as they are having difficulty convincing conventional gas consumers to sign 10-year supply agreements.

Why would we want Origin Energy to buy gas from overseas when it is digging it up for $1Gj all over QLD and sending it to China as part of the LNG export cartel?


Osaka Gas is also an exporter via Gorgon and Ichthys.

Handing control of import volumes to exporters, let alone cartelier exporters, is the dumbest possible policy. They then have control of all forms of supply. There is no competition or price pressure. You are implicitly setting your gas price above export net-back plus whatever the import monopoly wants.

All we need to do is reserve a bit more QLD gas. But if you must import it, stupidly, then the government should own and operate the vessel on a very narrow cost+ model.


Specifically, as a way of stopping the export cartel from charging whatever it likes for gas, which is what it is doing now at $13Gj:

Driving a new power shock:


Short of guiding a Ukraine drone into the Gladstone LNG facilities (joking), I’m at a loss for how to stop the gas and energy stupidity from growing ever larger.

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.