20 C
Byron Shire
October 25, 2021

Has the game changed for the our gas industry?

Latest News

#Bigbadbiomass rally at Condong sugar mill

Around 50 people gathered on Friday morning at the big fig tree near the Condong sugar mill to join the world-wide #Bigbadbiomass protest against the use of biomass to create energy and to emphasise that burning biomass is not ‘environmentally friendly’.

Other News

NSW – bad to worse

While Gladys has left the building and we have a new religious fanatic in the top job, things are...

Superior to civilisation as we know it

Indigenous folk of the Australian continent existed in superior fashion to civilisation as we know it   My evidence, your Dishonour?   There were no policemen, no wrongful...

STP inches closer

Paul Bibby’s article ‘Ocean Shores STP (OS STP) inches closer to closure’ (6 October) raises some questions with me...

Diadem Street, Lismore

Around 2,000 residents in Lismore lost their electricity connection on Wednesday night after a large gum tree took out power lines.

NSW Legislative Council expresses concerns over push to burn native forests for power

The NSW Legislative Council unanimously passed a motion expressing its concerns over the growing push by industry to burn NSW native forests for electricity and hydrogen production.

Locals gathering to object to burning forests, plastic, foils, and tyres for energy at Condong sugar mill

A public protest is taking place this Friday meet near the Condong sugar mill, north of Murwillumbah, at the big fig tree on Tweed Valley Way on Friday, 22 October at 10am to object to the burning of trees and ‘forest waste’ by Cape Byron Power to generate electricity at the Condong sugar mill.

Gas/LNG analyst with the Institute for Energy Economic and Financial Analysis, Bruce Robertson. Photo Tree Faerie.

The issue of energy and how we source it is still at the top of the political priority list for many people.

The recent damning report released by the parliamentary inquiry into the CSG industry in NSW, detailing how the NSW Government has failed to fully implement the majority of the NSW Chief Scientist’s 16 recommendations from 2014, has made many rethink gases role as a ‘transition fuel’.

If for no other reason, the industry just isn’t worth it.

With the global benchmark for oil, the Brent crude oil price, tumbling 25% on 9 March 2020 to close at USD33.75/barrel, the effect on Australian oil and gas stocks has been immediate and profound with stocks crashing between 18% and 35%.

Bruce Robertson, gas/LNG analyst with the Institute for Energy Economic and Financial Analysis (IEEFA) says the reaction of the markets would tend to suggest the impacts of the oil price weakness will not be short-lived.

‘Global oil prices have a profound effect on gas prices,’ says Robertson. ‘Australia’s export gas prices have effectively collapsed.

‘Australian gas consumers will soon be paying 47% more than their Asian competitors for Australian gas on long term contracts.

Gas the highest cost producer of power

Gas sets the price for electricity in Australia’s national electricity market, as gas is the highest cost producer of power and therefore is the last player into the market. Essentially lower gas prices have an immediate effect on the electricity price.

‘The solution to the gas price problem that Australian gas consumers face is for governments to call for more gas to be produced,’ says Robertson.

‘The current project being considered for approval is the locally unpopular Narrabri gas project. 

‘This ill-fated venture is a high-cost gas field where, if developed, it would struggle to supply Sydney with gas at much less than $9-10/GJ. 

‘This is clearly a globally uncompetitive price for gas. The Narrabri gas project is not economic in a world where gas prices are low and will remain so for the foreseeable future.’

Roberston says the big question to arise out of the oil price crash is will the NSW and Federal governments continue to look inwards and take advice from their donors in the gas industry, or will they make approval decisions for new projects in a global context of low gas prices?

Narrabri will entrench high gas prices for the Australian consumer

‘Approving Narrabri will entrench high gas prices for the Australian consumer in a world where low gas prices are the new normal,’ says Robertson.

‘It is simply not in the national interest.’

Australia is the world’s second-largest exporter of LNG and being close to Asia is a major supplier to the region. Australia exports around three-quarters of the gas that it produces. Long term export prices for gas are set as a percentage of the oil price. The oil price effectively sets the gas price for export contracts.  

Robertson says customers in Asia will be looking at getting their gas at $7.12/GJ under long term contracts if oil prices stay at current levels.

‘In Australia, the gas industry is able to charge domestic customers a premium to offshore markets as compliant politicians allow gas companies to run roughshod over the Australian consumer of gas,’ says Robertson.

‘The Australian Competition and Consumer Commission (ACCC) has repeatedly, over many years now, pointed out how we are paying more than we should be for gas.

‘Unfortunately, they refuse to enforce the price-fixing laws that exist in Australia or the laws relating to cartel conduct.

Politicians turn a blind eye to price gouging

‘Politicians, who are handsomely rewarded in the form of political donations, turn a blind eye to the obvious price gouging of the Australian consumer of gas and electricity.’

The ACCC has estimated that for every $1/GJ reduction in the price of gas the wholesale price of electricity falls by $11/MWh.

Currently in Australia customers seeking long term contracts are paying between $9-12/GJ to secure gas. 

Robertson says oil is down 49% this year as weak demand out of China has combined with a more recent effort by Saudi Arabia to start a price war.

‘The Saudi’s have opened the oil taps and intentionally crashed the price of oil in an effort to gain market share and restore their authority over the oil pricing cartel,’ says Robertson.

‘Discipline in the oil price cartel has been lacking and the Saudi’s are stamping their authority on global markets. It normally takes some time before pricing discipline in the oil market is restored.’

It is not just the markets that have spoken out on the longer-term effects of the oil price crash.

The world’s most feted investor, Warren Buffett, has pulled out of his US$3 billion investment in a Quebec LNG plant.

More on the subject from Bruce Robertson.


Support The Echo

Keeping the community together and the community voice loud and clear is what The Echo is about. More than ever we need your help to keep this voice alive and thriving in the community.

Like all businesses we are struggling to keep food on the table of all our local and hard working journalists, artists, sales, delivery and drudges who keep the news coming out to you both in the newspaper and online. If you can spare a few dollars a week – or maybe more – we would appreciate all the support you are able to give to keep the voice of independent, local journalism alive.

2 COMMENTS

  1. And Byron Shire Council has just voted to spend $800,000, as a first stage of funding, to build a bio energy plant that will divert green waste and sewerage sludge from a aerobic composting process, which produces little CO2, to an anaerobic process to produce Methane gas which produces significant quantities of CO2 when burnt (Methane is the same gas as extracted by fracking). They may have voted to adopt a “Climate Emergency”, but that doesn’t appear to apply to producing a new Methane stream (or to bulldozing carbon capture and storage forest).

  2. ….You’d have to be a screw loose to
    support the Narrabri gas project.
    ScoMo, with the help of the Reserve
    Bank, would do far better if they just
    went ahead & printed more money
    & upped the amount of assistance
    for the unemployed.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Can businesses ask for your vax status?

Currently, throughout the business community, we are witnessing uncertainty with respect to business owners asking the question – should we ask customers about their...

Tracking the hardening coast

Researchers are watching our shorelines get harder and simpler.

Recycling polystyrene just got easier at Lismore’s Recycling & Recovery Centre

The Lismore Recycling & Recovery Centre has a new machine that can recycle polystyrene which will help the facility increase the capacity to deal with this earth-wrecking synthetic-aromatic-hydrocarbon-polymer.

4WDs multiplying on Seven Mile Beach?

Beach users in Lennox Head are reporting much higher numbers of 4WDs on Seven Mile Beach recently, along with an increase in hooning behaviour. Since...