Australian LNG

Australian LNG has a long history of pioneering investment. From the North West shelf to the first floating LNG project ever constructed.

Like other Australian commodities this history aligns with that of development economics of Asia. The first wave of Australian LNG development grew to service a modernising Japan and its demand for energy.  This bilateral relationship has a long history of cordial relations, share-equity investment and oil-linked contract pricing to satisfy both parties.

The second wave of Australian LNG was far more chaotic, matching the staggeringly swift rise of the much larger Chinese economy. It began along with the pre-GFC oil boom and Malthusian assumption that the world was going to fall short of everything as the enormous Chinese and then Indian middle classes ballooned and consumed more energy per capita.

Multitudinous LNG projects were sanctioned in Australia which found itself by 2010 developing no fewer than seven LNG project simultaneously. Needless to say this did not end well with gigantic cost blowouts for all as they competed for labour and other resources.

Yet, as the commodity super cycle peaked in 2011, demand suddenly fell well short of expectations and kept doing so over the next four years. Making matters worse, the US shale revolution suddenly turned that nation from net LNG importer to net exporter of a magnitude equal to Australian LNG. The global glut from 2015 was enormous.

The Australian LNG boom included a particularly cavalier offshoot in QLD where coal seam gas was liquefied via three projects on Curtis Island. As the boom subsided, and oil-linked prices crashed, the companies involved were all either sold or destroyed.

The legacy left by the projects was one of very high Australian gas prices with very low Asian gas prices, also delivering an huge blow to the competitiveness of the east coast economy. Thus the $200bn investment proved to be the greatest single capital mis-allocation in the history of the Australian economy (and surely global energy markets) and was little more than a monument to Banana Republic economics as tax takes failed, income fell and hollowing out transpired on raised local costs.

MacroBusiness was the only analytic house to call the Australian LNG bubble early, track it and predict its demise. It continues to cover the LNG sector with daily updates and a large grain skepticism and is a must read for anyone that needs to know the economic forces coming to bear on the sector.

Also check – Daily Iron Ore Price, Australian Dollar

8

Gas cartel plays dead

The gas price is hanging around $19Gj again today as the cartel calculates that that is low enough to take the heat off it during ADGSM negotiations with the captured Resources Minister Mad King. Power prices have thus fallen back too and at these prices will raise utility bills by about one-third over the next

5

Gas cartel eaten by coal cartel

It’s cold comfort for punters being reamed by the energy cartels but take a moment to enjoy the earnings release of Origin energy today. The card-carrying member of the gas cartel is being hollowed out by the coal cartel: Origin Energy Limited (Origin) reports underlying profit rose 30 per cent to $407 million for the

8

Norway shows Australia the way on gas super profits taxes

The Australia Institute’s chief economist and executive director, Richard Denniss, has published startling analysis showing that the Norwegian Government will this year collect $137 billion from their oil industry courtesy of their well designed super profits tax. In turn, Norway’s Sovereign Wealth Fund will soar to $1.8 trillion – shared among only 5.3 million people.

2

Economists back gas reservation and super profits taxes

The latest survey of “48 leading economists” by the Economic Society of Australia and The Conversation asked “what other actions could authorities take to bring the inflation rate down?”. The second and third most popular choices related to reining in the gas cartel via domestic reservation and super profits taxes on fossil fuel producers: It’s

68

Albo’s monkeys dance around gas cartel organ-grinder

Albo’s cowards have leaked their grand plan for energy and it is more than a little ridiculous: Chris Bowen and state energy ministers will speed up the rollout of renewables, gas-proof Australia and minimise electricity market shocks under a national plan focused on slashing emissions. The strategy, expected to be signed off by energy ministers

62

Are Albo’s cowards capable of defending Australians at all?

Albo’s energy shock rolls on today with some easing in the gas price to $16.50Gj easing power prices as well: Meanwhile, Labor’s Mad King is busy pimping the openly criminal gas cartel: Resources Minister Madeleine King will issue a full-throated defence of coal, gas and other minerals in keeping the economy going as Australia and

56

Mike Cannon-Sunshinethief?

Not joking. As perverse as it seems, achieving the dream of linking Australian renewable energy to Asian energy buyers may generate a household electricity crisis as artificial as the current gas crisis. As with LNG, large scale solar projects are set to largely, perhaps even entirely, bypass domestic demand. The increase in energy prices in

5

ACTU demands regulation of “rapacious” energy cartels

No change yesterday as the gas cartel squeezed prices higher to $19Gj and NEM prices followed suit: The ACTU pulled no punches in a new report today: Implement a fairer inflation-reducing policy that protects workers’ incomes, prevents price gouging, and tackles the underlying sources of inflation, especially in energy and housing, and reduces the cost

14

Chris Richardson: Reserve and tax super profits on gas

You know you’re winning a debate when consensus followers like Chris Richardson are climbing aboard after years of ignoring a critical issue: After this month, however, consumer cash flows will be fully exposed…Much of the pressure is coming from energy costs. …Are there solutions? Economists aren’t usually fans of policies such as domestic gas reservation,

22

Kohler crucifies gas cartel

The criminal conspiracy that is Australia’s gas export cartel is pounded again today by ex-AFR media that appears to have finally figured it out. Alan Kohler joins the condemnation in a brilliant little video that makes the case that being nice to the cartel is very stupid: Even the gas cartel-captured AFR has finally read

7

Trade surplus hits record high as Aussies go bust

Today, the ABS recorded the largest trade surplus in Australia’s history. In June, Australia’s trade surplus rose to $17,670 billion, up 66% year-0n-year: As expected, Australia’s giant surplus was driven by LNG and coal exports, which both soared to record highs: This follows a gigantic rise in prices owing to the Russia-Ukraine war: Sadly, the

11

Gas cartel trashes Australia’s Asian relationships

As I have noted many times, the criminal enterprise otherwise known as Australia’s east coast gas cartel is not a sovereign risk, it is a risk to the sovereign: The Santos-controlled GLNG project in Gladstone, one of the three Queensland LNG joint ventures, has written to the Albanese government arguing that imposing unprecedented export controls

13

Appalling AFR pumps more gas cartel propaganda

What’s happened to journalism at the Australian Financial Review? This is a rhetorical question because we all know the answer. It has become the plaything of any and every vested interest in town. The latest example is this rot: Extending the Australian Domestic Gas Security Mechanism provides an excuse for Victoria and NSW to “go

7

War and interest rates

Zoltan Poszar of Credit Suisse with his latest biggest picture narrative. For some reason, I find this argument for a higher inflation regime more persuasive than his Bretton Woods III thesis. It is the magnitude of the story he tells and its non-linearity is also crucial. We could be sailing along into a resumption or