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APPEA points to IGU survey in

Australian gas price debate

AUSTRALIA AUSTRALIA’S upstream industry lobby has have successful major manufacturing sectors.”
used a new International Gas Union (IGU) While acknowledging that Australia’s whole-
report to counter arguments that the country’s sale prices were higher than in other major pro-
wholesale natural gas prices are too high. ducers such as the US, Canada, Russia and in
Australia’s wholesale gas price averaged $5.58 the Middle East, McConville said the difference
per mmBtu ($154.34 per 1,000 cubic metres) in reflected the “high cost of doing business in Aus-
2019, according to the IGU’s Wholesale Gas tralia, and increasingly the impact of restrictions
Price Survey 2020. The survey of 53 countries on the development of natural resources”.
showed that Australia’s price was around 40% Australian wholesale gas prices climbed from
less than the Asia-Pacific’s average wholesale around AUD4 ($2.78) per GJ in 2014 to a high
price, while it was just shy of being 30% cheaper of AUD20 ($13.83) in 2017, before collapsing
than the Asian region’s average wholesale price. back to around AUD4 this year. The price spike
The IGU’s survey results showed that Taiwan, followed the start-up three world-class coal-bed
South Korea and Japan paid the highest whole- methane (CBM) liquefaction and export pro-
sale gas price at or more than $10 per mmBtu jects on the country’s east coast, with the decline
($276.6 per 1,000 cubic metres), while China attributed to tapering Asian demand and rising
paid the sixth highest prices. global supply.
Australia ranked 18th overall in terms of “[C]urrent domestic prices have softened due
prices, with the lowest to be found in countries to low LNG prices. Queensland LNG operators
with highly regulated markets where produc- are now looking to divert cargoes that were des-
ers sold gas below the cost of production and tined for the LNG spot market to the east coast
transportation. domestic gas market. As a result, the eastern
The Australian Petroleum Production and seaboard gas spot prices have fallen and this will
Exploration Association (APPEA) seized on the persist until the global LNG markets dynam-
report, saying it put to bed frequently repeated ics rebalance,” Wood Mackenzie senior analyst
claims that Australian paid more for locally pro- Daniel Toleman told NewsBase.
duced gas than overseas buyers. However, Australia’s gas prices are anticipated
APPEA chief executive Andrew McCon- to rise again in the future despite mounting pres-
ville said: “Even before the sharp contraction sure from the local manufacturing industry cam-
we’ve seen in gas prices this year, Australian gas paign for prices to remain low to help support
users have enjoyed very competitive wholesale economic growth.
prices. The widely repeated claim that Australia’s “Fundamentally the Australian east coast
wholesale prices are higher than in the countries gas market is short of gas from the early-to-mid
importing our LNG has once again shown to be 2020s. As a result, we do not expect east coast gas
without foundation.” prices near AUD4 per GJ,” Toleman said. “LNG
McConville said: “Interestingly, the statis- import projects are unlikely to bring the price
tics show countries with the highest gas prices down. Import terminals are likely to be the mar-
including Chinese Taipei, South Korea, Japan, ginal cost of supply, thus creating a price floor.” ™
Singapore and China – well above Australia – all

P8 www. NEWSBASE .com Week 27 08•July•2020