Page 11 - AsianOil Week 07 2021

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A troubling prospect for the country’s gas there was “no expectation that all of these pro-
consumers, however, is the fact that a supply jects would be developed”.
shortfall projected to arrive in the middle of the The Australian oil and gas sector has been
decade is likely to drive prices higher. quick to highlight the ACCC’s findings that the
domestic well is supplied in the short term and
Supply security that domestic prices declined throughout 2020.
While the East Coast gas market is expected to There has, however, been some push back from
have sufficient supplies to meet the next three industry around allegations that the overseas
years of demand, the ACCC warned that the buyers of Australian gas are getting a better deal
country’s southern states could experience a than domestic consumers.
shortfall of up to 30 PJ by 2024, while the broader
East Coast market faced a similar challenge Push back
come 2026. Industry body Australian Petroleum Production
“It is concerning that the risk of a gas supply and Exploration Association (APPEA) argued
shortfall in Australia’s southern states contin- that prices paid by Australian industrial custom-
ues, despite this having been a looming issue for ers were well below those paid by industrial cus-
some time,” Sims said. tomers in Australia’s major export destinations.
He added: “There are new sources of supply APPEA said: “The ACCC and International
and related infrastructure that could be brought Gas Union have both found domestic Australian
online to avoid a potential shortfall. It is cru- gas prices to be lower on average than the prices
cial that investment decisions are made now to paid by Asian customers for Australian gas.”
ensure there’s enough supply, and to provide It added: “Recent market releases by major
downward pressure on future price rises.” Australian oil and gas companies have shown
One bright spot for the local gas supply pic- realised prices in the domestic gas market
ture has been Beach Energy’s new discovery at remain well below LNG prices received by those
the Enterprise gas field offshore Victoria. Beach same companies in their major export markets.”
said the find had boosted its 2P reserves by APPEA CEO Andrew McConville said the
21mm barrels of oil equivalent (boe), including industry would “welcome the opportunity” to
97 PJ (2.53bn cubic metres) of sales gas. discuss the differences between spot and term
Given that southern states face the greatest contract pricing with the ACCC.
risk of shortfall in the future, Sims urged the fed- Friction between domestic buyers and the
eral and state governments either to encourage LNG export sector is only likely to grow in the
investment in north-south transportation infra- coming years, as export volumes expand and
structure or in one or more of the five import new liquefaction capacity is eventually sanc-
terminal projects proposed for the East Coast. tioned. This suggests the industry needs to work
The five projects are based around the use of harder to win the ACCC over to its interpreta-
a floating storage and regasification unit (FSRU) tion of supply and demand dynamic. If it does
and are scattered across New South Wales, Vic- not, then further accusations of unfair pricing
toria and South Australia. However, because and supply strategies seem likely, bringing with
the five projects’ combined capacity exceeds the them the risk that the government may eventu-
southern states’ total demand, the ACCC said ally act against industry interests.™

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