If the below is the level of understanding how markets work and how Australian gas exports are now fully integrated into the global LNG trade, then how is it everyone thinks this Govt is somehow capable of rational economic management?
http://www.theaustralian.com.au/nat...to-gas-shortage/story-fn59noo3-1227051902353#
Energy Minister Ian Macfarlane is negotiating with the states to fast-track a fix to the shortage as domestic gas supplies are redirected to the booming export market while new production is vetoed on environmental grounds.
Mr Macfarlane dismissed calls from manufacturers to quarantine gas for the local market and blasted the NSW government for failing to develop its own coal-seam gas fields, sending prices skywards.
“The solution to high gas prices is to flood the market with gas,” Mr Macfarlane said ahead of the government’s looming policy plan for energy and manufacturing.
Some NSW energy customers pay $3 per gigajoule for gas under long-term contracts, but the minister warned the price would rise to more than $10 over the next few years because of limits on CSG production across the state.
To see local gas prices in that range you'd need LNG pricing of $18/GJ. Spot pricing has been trending down towards the $10GJ range. KOGAS has been deferring a large number of gas shipments. The Japanese are teaming up with India to form a major buyers club. The USA and Canada are bringing LNG terminals online over the next few years with the ability to export gas at the $10-12 GF range. All this should be known by the resource minister. If he doesn't then he should be sacked and someone who actually knows how the markets work for the majority of our resource exports put in his place.
It's quite likely now that local gas prices are going to settle at around the $6 GJ range as the gas glut continues to expand. Most of the LNG being brought online in Australia is at the top of the global cost curve and will barely break even as prices fall back to the $12 range. Major customers are already agitating for current contracts to be renegotiated, so don't expect any major deals to be announced for Australia any time soon.
I'm waiting for Macfarlane to explain what will happen to the gas if we go full throttle with CSG.
How much does he believe can be brought to the market over the next few years? What will the cost be for this new gas production?
Without a reservation policy won't any extra gas be exported to Asia if prices remain higher than the local market? Doesn't this mean CSG would have to bring enough extra gas to the market to actually cause, at a minimum, Asian LNG prices to fall? How much production does Macfarlane believe would be required to achieve this goal?
Is it sensible policy to cause excess production that negatively affects the pricing of a major export?
Australia is about the only major gas producer with no energy policy and no reservation policy. With manufacturing already in retreat, is it sensible to make things even harder by fully linking major domestic users into the global LNG market?
We have a Government who believes wind farms are ugly and is doing it's best to stop any more from being built, yet there's no evidence they have a negative impact on the environment, but they do provide farmers with a reliable income over many years as well as regional employment opportunities over the life of the wind farm.
Compare this with CSG, which most farmers are against, which has been repeatedly shown to leak toxic chemicals from poorly managed wells, and also requires billions of litres of brine to be somehow managed without damaging the local environment. After a few years he finite resource is depleted and the CSG companies move on. The benefit to the local community is relatively short lived, especially when compared to wind farms.
Maybe we'd be better off with the Government increasing funding to the CSIRO so they can commercialise their SOLGAS system. 25% higher energy content for a unit of gas using their catalyst and process. At least it helps to extend a finite resource rather than just using it up as fast as possible.
http://www.csiro.au/Organisation-Structure/Flagships/Energy-Flagship/SolarGas.aspx
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food for thought
http://www.afr.com/p/business/companies/woodside_coleman_in_fresh_indian_bMf838xSnR7AFKE1Psqc1J
…It is set to receive its first LNG supplies from Australia in 2015-16 through a 20-year contract signed in 2009 between Petronet LNG and ExxonMobil for LNG from the $54 billion Gorgon venture.
However that contract is said to be among India’s most expensive LNG deals, and reports in India say Petronet has been under pressure from gas buyer GAIL (India) to renegotiate it to a lower price.
http://timesofindia.indiatimes.com/...l-LNG-at-lower-price/articleshow/41813752.cms
The company had recently offered to supply LNG to FACT at12 dollars per MMBTU (million metric British thermal unit). The price was $16 to $19.5 when the terminal was commissioned late last year.
“We are ready to pass on the benefits of the fall in prices of LNG in the global market to all customers. What is important for us now is to increase the throughput from the terminal,” said Petronet managing director and CEO Ashok K Balyan after the director board meeting here on Thursday.
Balyan, however, conceded that the company had not heard from FACT on resuming gas offtake from the Puthuvype terminal. FACT, which had initially bought LNG from Puthuvype, stopped later saying that the gas price was higher. “They are waiting for some clearances to revive supply,” he said.
http://www.hellenicshippingnews.com...offload-10-17-lng-cargoes-in-oct-nov-sources/
“Kogas are deferring for the second time so [their] options are now exhausted. I’m not sure how much more assistance the sellers can give,” the source said.
The supply overhang could total more than 1.5 million mt over 2014, with some reports pegging the surplus as high as 30-40 standard sized cargoes, as previously reported by Platt