Two of Australia’s richest people are very unimpressed with your coming cheaper utility bills.
Gina Rinehart’s Senex Energy has ramped the hyperbowl to full spew.
Speaking at an industry event on Thursday, Senex Energy chief executive Darren Stevenson accused Canberra of moving towards political control of gas supply, and pricing through expanded ministerial powers over exports and domestic market obligations.
“The ministers are effectively taking control of the gas market,” Mr Stevenson said.
“We’ve invested private capital in that, and now they’re proposing to make it a black box where ministers can decide what to do.”
Really? 20% of uncontracted and newly contracted export sales look like broad daylight to me. What we had before was a black box of ineffective policies protecting monopoly gouging.
There’s more.
Industry concerns intensified following a call between producers and the Department of Climate Change, Energy, the Environment and Water on Thursday morning, during which officials indicated producers would still be required to supply gas domestically regardless of whether buyers were willing to pay commercially viable prices.
According to several industry participants on the call, the industry sought clarification on how the mechanism would operate if buyers demanded prices below the cost of production. Officials indicated the supply obligation would still apply.
We have to ask what the production cost is here. Does it include the cost of building the LNG plants and associated infrastructure?
Why should local gas buyers pay for that? Removing it leaves only the break-even cash cost, which is negligible, so profits will continue despite asset write-downs.
What do you expect after raping the East Coast economy for a decade? A piece of cake?
Meanwhile, Kerry Stokes’ Beach Energy is also barfing.
Beach Energy chief executive Brett Woods, who expects to meet government officials shortly to discuss his concerns, said the plan as currently designed risks causing “material harm” to the market. Beach, whose biggest shareholder is Kerry Stokes’ SGH, only produces gas for the local market on the east coast.
“It is naive at best to think that structural oversupply in a market will attract the investment Australia needs in natural gas exploration and development,” Woods said, reiterating his worries about the harmful impact on domestic-only producers.
Based on Beach’s recent financials, I put its cash breakeven at $1.8Gj. It is currently earning $10.70Gj.
Add a few other costs, like the champagne, caviar and whores, and you probably get to $4Gj.
It’ll be Ok.
More importantly, so will you.
UBS energy analysts on Thursday slashed their price forecasts for both the east coast gas and wholesale electricity markets in 2027 and 2028, citing the plan to “force a permanent oversupply in Australian domestic gas markets to break the nexus with … international LNG prices”.
UBS said the reservation plan would work alongside other factors, such as strong battery uptake and increased generation from renewables, to reduce electricity prices over the next two years.
Unless you live in QLD, which wants to keep you rorted.
The Crisafulli government last week told Bowen that federal Labor’s plan to give Western Australia “preferential” treatment under the scheme placed an unfair burden on Queensland’s producers and would slam the brakes on investment in other states.
I can’t believe Albo’s cowards have finally got this right.
Let’s hope it holds.
