Page 4 - GLNG Week 20 2021

GLNG COMMENTARY GLNG

Queensland boasts of

gas supply “rescue”

The state government has claimed that local gas

projects will soon rescue southern states from gas

supply shortfalls

POLICY THE Queensland State government last week additional gas to the domestic market, par-
trumpeted the news that it had “rescued” the ticularly to the southern states who are facing
WHAT: country’s southern states from a natural gas sup- a potential gas shortage crisis in the coming
Origin and APLNG have ply shortfall. years.”
agreed to send more gas Queensland Resources Minister Scott Stewart Stewart highlighted his government’s ongo-
south. said on May 11 that an agreement between Ori- ing efforts to encourage gas production for the
gin Energy and Australia Pacific LNG (APLNG) domestic market through the release of acreage
WHY: would see more of the state’s gas flow south where output is ringfenced for local buyers.
AEMO has predicted gas ahead of a predicted shortfall. The official added that the additional gas from
shortages in the southern Stewart said an additional 91 PJ (2.37bn APLNG would help to meet a “potential gas
states. cubic metres) per year of gas would be available shortfall from 2023 as forecasted by” AEMO.
to southern states from 2022 following the two His comments, however, somewhat overstate
WHAT NEXT: sides’ four-year supply agreement. He added the looming supply shortfall, with AEMO itself
Gas supplies to that the additional gas would help to meet a noting in March that the start-up of just one
Queensland’s projects potential shortfall forecast by the Australian LNG import project would help to delay gas
may dry up later this Energy Market Operator (AEMO) to emerge shortages until at least 2026.
decade. from 2023.
Stewart, however, ignored the fact that Justified concerns?
AEMO now considers such a gap as unlikely to The prospects of a short-term gas supply short-
arise until at least 2026, given growing support age have been a recurring theme of both AEMO
for LNG imports. and the Australian Competition and Consumer
Perhaps a more troubling prospect for the Commission’s (ACCC) annual reviews of the
state is the fact that feedstock supplies for its East Coast gas market.
three world-class LNG export plants could AEMO has consistently warned that the
begin drying up as soon as 2030. southern states were on the verge of seeing sup- The start-up of
plies fall short of demand, with Victoria forecast
Bragging rights to experience shortages first. just one LNG
Stewart’s comments were posted nearly a full This year, however, AEMO’s message was import project
week after Origin announced that it had secured noticeably different. The regulator said in its Gas
additional gas to increase supply to customers in Statement of Opportunities (GSOO) report, would help
southern markets “materially”. which was published on March 29, that should
Origin said on May 5 that it had signed a sup- just one of the five import terminals planned for to delay gas
ply agreement with APLNG – in which both it the East Coast come to fruition in the next two
and ConocoPhillips hold 37.5% and Sinopec years, then a supply shortfall would likely be shortages until at
owns 25% – for an additional 91 PJ of gas from postponed until at least 2026. least 2026.
January 2022 at a JKM-linked price. The com- AEMO said this was a very achievable out-
pany said volumes would be shaped to high- come as long as committed field developments,
er-demand winter months. pipeline expansions and Squadron Energy’s
Origin has also secured additional pipeline Port Kembla Gas Terminal (PKGT) proceeded
capacity through a three-year agreement with as planned. Squadron is developing the import
infrastructure operator APA that will allow it project at the titular New South Wales port.
to pump significant volumes of gas south from The market operator noted: “If these com-
2023. mitted projects are not delivered to sched-
“Once again Queensland is stepping up and ule, greater reliance would be placed on
doing the heavy lifting on domestic gas supply storages, and gas shortfalls of up to 100 TJ
and policy,” Stewart said. “This deal will bring [2.6mn cubic metres] per day may eventuate

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