Gas cartel HQ can’t even do basic maths. Or, rather, chooses not to.
Analysis by Kroll Economics, commissioned by Beach Energy, estimates the policy could cost Australia around $2.9 billion annually through lower export revenues and reduced infrastructure value.
It also projects a reduction in Australian GDP of about $653 million by 2030, with Queensland bearing the largest impact because its LNG industry would be most affected.
Critics argue that the scheme would lower domestic gas prices initially by diverting gas from exports into the local market rather than creating new supply.
While this would benefit domestic consumers in the short term, it would reduce revenues for LNG exporters and domestic gas producers, weakening incentives to invest in new gas developments.
Beach Energy chief executive Brett Woods described the proposal as an “investment killer”, arguing it would make Australia a less attractive destination for energy investment.
He also disputes the government’s claim that existing LNG contracts are protected, arguing the obligation effectively applies to all LNG exports, including gas committed under long-term agreements.
Let’s dispense with these lies one by one.
Existing contracts are grandfathered, so they are not affected. In effect, only new contracts and spot export are impacted.
Any reduction in GDP will be the choice of the gas companies, which is largely irrelevant. For Australians, GDP will rise as local businesses and households pay lower energy prices once more. Non-gas foreign capital will love it, too.
Whether Beach wants to “kill” itself is up to Beach. Here are my estimates of how the prices will be affected.
I’ve allowed for some new contracts to be signed once they start to roll off in 2030.
| Year | Exports (PJ) | Contracts (PJ) | Spot (PJ) | Reservation Volume (PJ) | Remaining 2P (PJ) | Bass Strait Supply (PJ) |
|---|---|---|---|---|---|---|
| 2015 | 420 | 700 | -280 | -56 | 38,000 | 680 |
| 2016 | 940 | 950 | -10 | -2 | 37,060 | 650 |
| 2017 | 1,140 | 1,030 | 110 | 22 | 35,920 | 620 |
| 2018 | 1,190 | 1,080 | 110 | 22 | 34,730 | 590 |
| 2019 | 1,200 | 1,110 | 90 | 18 | 33,530 | 560 |
| 2020 | 1,120 | 1,120 | 0 | 0 | 32,410 | 530 |
| 2021 | 1,270 | 1,140 | 130 | 26 | 31,140 | 500 |
| 2022 | 1,177 | 1,150 | 27 | 5 | 29,963 | 470 |
| 2023 | 1,194 | 1,160 | 34 | 7 | 28,769 | 450 |
| 2024 | 1,250 | 1,170 | 80 | 16 | 27,519 | 430 |
| 2025 | 1,233 | 1,170 | 63 | 13 | 26,286 | 410 |
| 2026* | 1,230 | 1,170 | 60 | 12 | 25,056 | 390 |
| 2027* | 1,225 | 1,170 | 55 | +11 | 23,831 | 370 |
| 2028* | 1,220 | 1,165 | 55 | +11 | 22,611 | 350 |
| 2029* | 1,215 | 1,160 | 55 | +11 | 21,396 | 330 |
| 2030* | 1,210 | 1,150 | 260 | +52 | 20,186 | 310 |
| 2031* | 1,120 | 1,150 | 260 | +52 | 19,066 | 290 |
| 2032* | 1,100 | 1,100 | 260 | +52 | 17,966 | 270 |
| 2033* | 1,100 | 1,100 | 260 | +52 | 16,866 | 250 |
| 2034* | 1,100 | 1,100 | 260 | +52 | 15,766 | 230 |
| 2035* | 1,100 | 1,100 | 260 | +52 | 14,666 | 210 |
As you can see, the reservation obligation to 2035 is tiny relative to extracted gas volumes and reserves.
After 2035, another 700PJ of export contracts roll off, which would add 140PJ to the local market, a significant glut. But Bass Strait will still be winding down, so we will still need that gas too.
The problem with the scheme is not harsh enough from 2027, but the global gas glut will probably take care of that.
If Beach Energy’s business relies on a cartel that gouges exports, then it is not a legitimate business. It is a rent-seeker dag hanging from the arse of foreign energy raiders.
Piss off and go back to the drawing board.
