The gas cartel shills are in gear for the Santos takeover, according to the AFR.
“The opportunity is there to leverage a far better outcome for the domestic energy market through a highly conditional approval – not just an undertaking to do things some time in the future. No, from day one, you rectify the situation where GLNG has been hoovering up third-party contracts.”
Sources close to ADNOC point to the group’s commitment to domestic gas in its home market, where it has a 60% share, and investments in Egypt, Azerbaijan and Turkmenistan, which have a strong focus on local supply.
Still, Barrenjoey’s analysts calculated that Santos holds a relatively minor share of the east coast domestic market, or 8% to 10%, rising to 12% to 15% if GLNG is included. The share is smaller in reality, given much of the Cooper Basin gas is piped to GLNG under a contract expiring in 2028-29, they said.
OK, so let’s unpack the details.
Why is ADNOC committed to its domestic market?
- It is publicly owned, so what choice does it have?
- Prices are regulated, so what choice does it have?
Average gas prices for power and industry range from $1-4Gj.
Does this compare with ADNOC operating in Australia in any way? It’s comparing apples with I-beams.
Is the Santos share of East Coast gas significant at 12-15%? Yes. Total East Coast production is about 2000Pj per annum.
The AEMO’s predicted shortfall for gas during the energy transition is up to 200Pj.
Therefore, we require a domestic reservation, or its equivalent, of approximately 12-15% of the market to ensure lower prices.
Basically, most of Santos’s production.
Does it matter if it comes from ADNOC instead? Yes. Because ADNOC did not make the mistake of overbuilding LNG capacity, Santos did. So it will be all the harder to argue a case for intervention once sold.
That case must be made now.
The only Santos project that might be developed to aid local supply is Narrabri. It is useful at 70Pj per annum, if filthy and environmentally risky.
But it is not enough, and if reserved only in itself, it means other unreserved gas currently supplied from QLD will go offshore instead, changing nothing.
The only way the Santos transaction makes any sense to Australia is the forced divestment of one LNG train from GLNG to a new Australian government gas company. I would include a third-party gas ban and the Narrabri assets.
Unfortunately, Santos only owns 30% of GLNG, but the other owners can be bought out of the train. National Gas Co. can then operate the train with domestic supply and pricing a major consideration.
Just as ADNOC does at home.
To simply let GLNG go so it is 100% removed from local ownership and 100% removed from the mistakes and lies of the past is national energy suicide.
