Page 12 - AsianOil Week 04

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Australia softens position over gas reserve scheme
POLICY
THE Australian government has softened its position on introducing a natural gas reserve policy following the release of a review into the Australian Domestic Gas Security Mechanism (ADGSM).
Australian Minister for Resources and North- ern Australia Matt Canavan released a statement on January 24 saying that Canberra would work with state and territory governments over the next year to “consider options to establish a pro- spective national gas reservation policy”.
The statement moves the government away from the definitive position set out by Canavan on December 5, when he said Canberra would simply work with governments to implement the policy.
Theminister’scommentscameasthegovernment released its review of the ADGSM, which found that short-term gas offers had more than halved since the mechanism’s introduction. The ADGSM gives the federal government the power to limit liquefied natu- ral gas (LNG) exports from projects that are running at a deficit to the local market.
Canavan noted that short-term gas prices at the Wallumbilla Gas Supply Hub had fallen by around 46% from February 2017’s average of AUD12.49 per gigajoule ($325 per 1,000 cubic metres) to AUD6.71 per gigajoule ($174 per 1,000 cubic metres) in December 2019.
But despite improved wholesale gas prices, Canavan said some businesses were still find- ing it difficult to get longer-term gas offers and “some price offers remain higher than I want to see, especially when international LNG prices are low”.
He added: “That is why we will keep the ADGSM in place until its scheduled end in 2023, and the ACCC will continue to monitor the gas sector out until 2025.”
The statement said the review’s findings were supported by the competition watchdog, the Australian Competition and Consumer Com- mission (ACCC), and Australia’s energy market bodies including the Australian Energy Market Operator (AEMO) and the Australian Energy Regulator (AER).
Interestingly, while Canavan’s early Decem- ber comments have gained little industry trac- tion, his more obscure position has attracted a great deal of commentary.
The CEO of Queensland Resources Coun- cil, Ian Macfarlane, told The Australian: “We’ve got to make sure that enough gas is available for domestic customers and that gas needs to be at a reasonable price based on the LNG netback price. My understanding is that there is ample gas and it is being priced off the LNG netback price.”
He added: “I don’t think it (a domestic gas reservation policy) is necessary because there is ample gas, but that’s a discussion we will be having with the minister over the coming months.”
The head of Australian Industry Group, Innes Willox, said: “A reservation might give gas users greater security, or inadvertently undermine them. It may be a long time before a potential reservation has any effects, and it does not look possible to reverse the step change in production and transport costs.”™
Santos sets production record in 2019
PERFORMANCE
AUSTRALIAN independent Santos increased its production of crude oil and natural gas by 28% year on year in 2019 to a record 75.5mn barrels of oil equivalent (206,800 barrels of oil equivalent per day).
Annual production rose despite Octo- ber-December’s output slipping 5% quarter on quarter to 18.7mn boe (203,300 boepd), the developer said in its fourth-quarter activities report published on January 22. It attributed the slide to domestic gas customer outages in Western Australia.
Santos’ production profile was significantly bolstered by its acquisition of 100% of Quadrant Energy for $2.15bn in November 2018, which
added significant WA production and reserves to its portfolio. Quadrant’s output in 2017 was 19mn boe (52,100 boepd) and its proven and probable 2P reserves amounted to 220mm boe.
This helped the company’s share of output from fields in WA to more than double last year to 30.9mn boe (84,700 boepd) compared with 12.5mn boe (34,200 boepd) in 2018.
Other upstream highlights included Santos’ second consecutive year of production growth from its Cooper Basin assets, where the com- pany drilled 115 wells. The company’s share of production from its Cooper interests rose from 15.5mn boe (42,500 boepd) in 2018 to 15.8mn boe (43,300 boepd).
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w w w. N E W S B A S E . c o m Week 04 29•January•2020