There is justice in the world, after all.
Santos’ GLNG gas export venture in Queensland is emerging as likely to be the biggest casualty in the reforms expected from Labor’s review of the east coast gas market rules, with one analyst estimating it could face a hit of up to several hundred million dollars a year.
Several of the submissions to the government’s review of the market have highlighted GLNG’s role as a major buyer of domestic gas to meet its LNG export contracts, including one from the competition watchdog.
Buying gas from the domestic market to meet LNG contracts adds further pressure on the availability of gas for local customers on the east coast, which are already struggling with limited supply choices and prices that have become unaffordable for some.
The purchases from the domestic gas market by GLNG, which includes Korea Gas Corporation and two other overseas oil and gas partners, contrasts with the other two LNG export ventures in Queensland – Origin Energy’s APLNG and Shell’s QCLNG – that buy either no or less domestic gas. APLNG and QCLNG also supply gas from their own acreage to domestic customers.
As usual, the policy is not created by your elected leaders but by the gas industry itself, which has decided it’s better to throw Santos to the wolves than it is to take them all down.
After all, it was STO that lied most fulsomely that it had enough gas to fill its infamous last-minute second LNG train.
Is it enough? This question is twofold.
First, would STO be forced to shut down the second train? It is already operating far below capacity. There is a real risk that it would close completely, and that would probably break export contracts. Most likely to Korea.
We shouldn’t care, but Albo the coward says that is a non-starter.
Second, the move delivers a lot of gas currently exported.
That is a sizable contribution and would help solve domestic shortages, though it doesn’t add much competition, so I would be wary of the price impacts.
But it may also mean cascading failures of export contracts that are already short of gas.
I still think there is some kind of deal brewing here that releases Beetaloo gas either for domestic needs or export.
The problem is that it is too expensive to make any difference to either.
