Page 10 - AsianOil Week 07 2021

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ACCC warns of gas supply

shortfalls, price spikes

The Australian competition watchdog has warned that a retreat in
domestic gas prices may be short-lived, owing to a looming supply shortfall

COMMENTARY AUSTRALIA’S competition watchdog has pressure on gas prices over the past year. How-
released an interim update to its ongoing inquiry ever, its noted: “While lower gas prices are pro-
into the state of the country’s gas market, revis- viding some relief to manufacturers and other
WHAT: iting in the process perennial hot topics such gas users on Australia’s East Coast, prices were
The ACCC has said as pricing, supply shortfalls and the need for still higher than export parity.”
warned of a 30 PJ gas imports. The commissioned said price offers for sup-
supply shortfall in 2024. The Australian Competition and Consumer ply in 2021 fell from AUD8-14 ($6.22-10.89) per
Commission (ACCC) said in its Gas Inquiry GJ during the second half of 2019 to AUD6-8
WHY: 2017-2025 interim report, which was published ($4.67-6.22) per GJ by mid-2020.
Not enough domestic on February 16, that while wholesale gas prices “The fall in gas prices is very welcome news
production projects have had fallen, domestic buyers were still paying for major gas users who, like many other Austral-
been sanctioned. more for locally produced gas than buyers ian businesses, have faced enormous challenges
overseas. in responding to the COVID-19 pandemic,”
WHAT NEXT: It highlighted that the existing correction in ACCC chairman Rod Sims said.
Prices will likely rise, Australian gas prices, driven in part by record But while the gap between domestic prices
justifying the construction low oil and spot liquefied natural gas (LNG), and LNG netback levels had closed, the watch-
of at least one LNG import may not last given that the East Coast gas market dog noted that domestic customers were still
terminal. is just a handful of years away from witnessing paying more than export parity.
an annual supply shortfall of as much as 30 PJ “We welcome the narrowing of the once-large
(781.46mn cubic metres). gap between domestic and export parity prices,
The commission noted that government but despite some improvement domestic cus-
efforts to ringfence LNG export projects’ uncon- tomers are still paying more than overseas cus-
tracted gas volumes were unlikely to bridge tomers,” Sims said. “LNG producers have not
the divide and would require one of the pro- provided an adequate explanation as to why this
posed import terminal projects currently to be is the case, or why we should accept it.”
sanctioned. The report notes that expected 2021 LNG
netback prices fell from about AUD8 per GJ in
Pricing picture November 2019 to less than AUD5.50 ($4.28)
The ACCC observed that coronavirus (COVID- per GJ in May 2020, remaining below AUD6 per
19) pandemic had put significant downward GJ between March and August 2020.

P10 www. NEWSBASE .com Week 757 18•February•2021