Are we getting somewhere? The Australian.
The top Abu Dhabi executive spearheading its $30bn Santos takeover has opened crunch talks with the Australian Workers Union which took aim at Santos’s venture in Gladstone for sucking up third party gas to meet its LNG export contracts.
Mohamed Al Aryani, president of international gas at ADNOC’s XRG, met personally with national secretary Paul Farrow in mid-August before divulging an unexpected bid delay as the spotlight beams on regulatory hurdles to the controversial deal. Treasurer Jim Chalmers must decide whether it is in the national interest.
The AWU, a high profile backer of Dr Chalmers, has drafted its own blueprint for ensuring local gas remains accessible at affordable prices for Australian users, including the need to reserve supplies for domestic industry.
The AWU on Sunday, meanwhile, issued its new 16-part demand for a retrospective gas reservation scheme, forcing LNG exporters to supply a prescribed portion of forecast total domestic demand.
A total ban on third-party deals would certainly help. At 80-100Pj per annum they are big.
Here’s what the ACCC says.
The Queensland LNG producers control reserves and resources that well exceed their foundational LNG contract requirements (chart 1). These export contracts are currently expected to expire around the mid-2030s, after which there is projected to be a significant reduction in LNG production (chart 2). Governments should consider whether policy settings provide incentives for timely gas production while ensuring that there is adequate supply to support the domestic market during the energy transition.
This is the artificial nature of the shortage. There is plenty of gas. The cartel drip-feeds it on purpose to lift local prices.
This is why the Peter Dutton proposal was so good. Because it used export levies to force an abundance of gas into the local market, the cartel will have to produce more of it, or its profits will be slaughtered by the levies.
The alternative path proposed by the cartel and its corrupt mates at the Grattan Institute, in which export permits will only reserve new gas, only guarantees local prices stay high to make Beetaloo gas viable.
The AWU is right to demand retrospective reservation, but it must ensure that whatever mechanism it chooses forces the production of more gas, or the cartel will go on a production strike.
It can afford to do this because the gas is unconventional, requiring regular drilling, so capex can be matched to monopoly production goals.
Albo is a coward who always seeks political mollification. By ruling out retrospective reservation so nobody gets upset, he has killed any chance of lower prices.
