Page 16 - AsianOil Week 26 2021

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fuel cost management plan as fuel accounts OCEANIA should be calculated,” Ms Brakey said.
for approximately 65-70% of total costs of The ACCC has reviewed all aspects of
sales and services. ACCC seeks views on LNG the LNG netback price series, including the
BGRIM, June 29, 2021 period for which forward prices are published,
netback price series the choice of international reference price
used, and the costs that should be deducted
EAST ASIA The ACCC proposes to further increase when calculating the netback price.
transparency in Australia’s east coast gas Following this review, the ACCC has
Inpex, Joetsu City sign market by including longer-term prices in its proposed that the current methodology for
widely-followed Liquefied Natural Gas (LNG)
the netback price series should remain the
carbon neutral gas supply netback price series, under a draft decision same, but that prices extending out to five
years should also be published.
released today.
agreement to add transparency to the gas market, and is to publish historical and short-term forward
The ACCC publishes LNG netback prices
The ACCC’s draft decision is to: continue
Inpex and the Joetsu City Gas and Water currently reviewing the price series as part of LNG netback prices extending to two years,
Bureau (the bureau) jointly announced they its ongoing gas market inquiry. based on the Japan Korea Marker (JKM), a
entered into a carbon neutral gas sales and The development of three LNG projects measure of Asian LNG spot prices; publish
purchase agreement and started supplying in Queensland connected the east coast gas longer-term forward LNG netback prices
carbon neutral gas. Through this agreement, market to international markets. As there extending to five years based on an oil index,
the bureau will purchase carbon neutral is insufficient gas production on the east with estimates of the appropriate percentage
gas from Inpex from July 2021 to March coast to fully utilise the LNG plants, LNG to apply to oil indexes to calculate LNG prices
2026 and convert a portion of the natural producers can sell any uncontracted gas either sourced from a consultant; maintain the
gas it supplies to major customer Arisawa domestically or overseas. As long as this current approach to estimating export costs
Manufacturing Co., Ltd. (Arisawa) to remains the case, LNG prices in international in calculating LNG netback prices; source
carbon neutral gas, contributing to a CO2 markets will continue to influence Australia’s longer-term LNG freight cost estimates from
reduction of approximately 19,000 tons. In domestic gas prices. a consultant.
addition, the bureau will convert the natural The ACCC’s netback price series is an ACCC, July 1, 2021
gas utilized at its own facilities to carbon indicator of the prices Australian gas suppliers
neutral gas. can expect to receive for exporting their APPEA: ACCC netback
The bureau is promoting the reduction gas, and therefore what a domestic gas user
of CO2 emissions through the proposal of will need to pay to secure gas. It is the price pricing draft report
energy-saving solutions to customers and level at which an LNG producer should be
fuel conversion, based on its management indifferent about supplying uncontracted gas The voice of the oil and gas industry today
policy as a gas operator of promoting the domestically or to export markets. said the Australian Competition and
efficient use of natural gas, which has a “Our LNG netback prices reflect Consumer Commission’s (ACCC) report
limited environmental impact. The bureau commercial realities and bring essential on netback pricing confirmed the current
will leverage this agreement to work toward transparency to the east coast gas market. mechanism appropriately reflects the
the widespread adoption of carbon neutral The price series helps to address information Australian market.
gas in order to support the further growth of asymmetry between gas buyers and sellers, APPEA Chief Executive Andrew
customers such as Arisawa that are working and to improve the balance between the McConville said, as the ACCC has previously
to reduce their CO2 emissions. Currently, the relative bargaining positions of parties,” stated, the netback price was an indicator and
bureau markets carbon neutral gas exclusively ACCC Commissioner Anna Brakey said. not an actual price in the market.
to large-scale consumers. However, the bureau “The published prices do not represent “The current mechanism accurately reflects
is making preparations to supply carbon the ACCC’s view of a fair price for sellers or the massive investment and commercial
neutral gas to commercial and industrial buyers, or a regulated price cap.” risk taken by producers to develop more gas
customers also. The bureau will furthermore “In reviewing this price series we have resources, which in turn has underpinned
contribute to the realization of a carbon- carefully considered the views of a range of ongoing supply to domestic customers,” Mr
free society and the sustainable growth of stakeholders. Major gas users, industry bodies, McConville said.
communities by reducing its CO2 emissions. gas suppliers and market analysts all gave us “The review found, consistent with
INPEX, July 1, 2021 their views about how LNG netback prices APPEA’s advice, that for LNG producers on

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