This is about high gas prices for consumers and “shortages”.
While Australia is one of the top exporters of liquefied gas, massive volumes of production from Queensland’s gas fields are locked into long-term export contracts to LNG buyers in Japan, Korea and China, and gas produced in WA cannot be transported to the eastern states.
(there was a similar existing topic but it was complaining that the last reply was over 2 years old)
It was not a ‘complaint’ from Discourse the forum software, just informational for the poster to decide whether to add to an old topic or start a new one.
A number of otherwise ‘old’ topics get highly relevant additions from time to time. When I merge topics I put a link in the original post to where more recent posts start.
I think your new topic should stand because it highlights how government approached prioritising business and profits against taking care of us first. I suspect many pollies were swayed by a necessity for exporters to be able to sign contracts in good faith no matter what, not just be able to export when it is convenient. Those of us using gas are paying for that. As for the royalties Australia should have received over time? That is a different topic and while it affects us, it is not a consumer issue per se.
About the contract with Japan:
Japanese energy companies are on-selling surplus Australian gas to allies in South-East Asia to shore up its influence in the region against China while securing its economic future as an energy trader.
We are paying more directly as domestic gas prices have risen as it has become scarcer. On the east coast this is because:
We are also paying indirectly as industries that rely on gas have to put up their prices or go out of business. This has widespread ramifications.
On the west coast, which is a separate market, prices are much more reasonable as they have huge local fields and instituted a state reservation policy, which was condemned by the industry of course, but actually works.
At the national level this has been a monumental failure of government in allowing the cartel to dictate terms. This impost will continue on for at least a decade as, while home gas consumption is falling, the price of gas will directly effect the price of power when gas generators have to be used to support renewables until power storage stabilises the grid. Present and future governments have their hands tied by the incompetence of those of the past.
We have vast amounts of gas but now instead of it being cheap we pay through the nose. So much for the transition fuel and forward planning.
I think the solution would be to reduce the amount of gas for one of the countries they export to. Japan clearly doesn’t need all of that gas. If the political parties won’t do anything like that what can be done? Is there some organisation that can help? Or maybe people could put pressure on the government somehow? BTW because of WA’s laws they don’t have a gas problem. But the Sydney Morning Herald is saying that the east coast can’t get gas from WA. (which is good for gas company profits)
How do you come to that conclusion?
Of course the East coast can. The gas from WA gets liquified and put on LNG tankers. As does most of the QLD gas.
Instead of pointing the tankers north, point them south. Just need discharge terminals to handle the gas offload.
If you look at the graph it looks like exports are about 90% and Australia’s gas is about 10%. There are three main contracts so they probably use about 20% or 30% of the exports. If Australia’s share was doubled or tripled then maybe there would be no gas shortage. The story of Japan reselling the gas means that it doesn’t need all of it for its own usage. Or there could be lots of exports that don’t even have an unbreakable contract like those three Asian nations.
Yeah that sounds like a good solution - then you don’t have to worry about Asian contracts (unless WA has contracts?) Though it would theoretically be cheaper if Queensland, etc, just used their own gas.
Actually QLD doesn’t really need or use gas that much. There are gas pipelines going south to NSW and VIC but they are at maximum capacity.
Whether Japan really “needs” all the gas they buy is not something for our government to judge.
How would Oz deal with the contracts in place? Abolish them by fiat?
How would the exporters be made to break them?
Governments are not all powerful, any attempt to force exporters to forgo billions of dollars of income from approved projects would be met with violent objections. Governments cannot just abolish earnings from private industry and default on export contracts with no consequences.
If gas had been reserved years ago before the mega projects in QLD and WA were approved and contracts made it would have been possible. That boat has sailed both literally and figuratively.
I’m talking about adjusting the contract with one nation. Though apparently WA’s laws make sure there is a lot of gas for their people but we don’t have similar laws.
Maybe one of the contracts would expire eventually and there could be a policy waiting for that?
I see that it is but one nation but it is a powerful one and a major trading partner. You have not given any method for breaking contracts or dealing with the ramifications.
It is the nature of contracts that you cannot break them unilaterally years later without serious consequences just because you have discovered you made a terrible deal. The more powerful the international parties and the bigger the value the more the consequences.
There are methods the Gov can use to get more of OUR gas into the Australian market that do not involve any breaking of export contracts.
There are increases in the PRRT, to encourage producers to sell into Aus markets, rather than export.
Limits on future expansion to include provisions that this gas goes to Aus markets first, and what is surplus can be exported. Like WA.
Just buy surplus gas on the open market. What Japan for example doesn’t seem to need anymore as they restart their nuclear reactors after Fukashima could be bought off them and never even shipped offshore in the first place.
How does that work? I did not think PRRT was only on exports.
Who buys it? Why will it be any cheaper than the current domestic price?
As already noted the shortages are firstly for NSW and Victoria.
Both states have over time relied on domestic NG gas production from Bass Straight. Past industrial and consumer needs have been catered for through the development of that resource and the networks for distribution and consumption of gas within each state. The decline of petroleum and domestic gas production from Bass Straight is not a new revelation. A situation well known about for many years and terms of government. Why this has been allowed to happen is now a history lesson for the two most populous states, and an aside to the consumer needs.
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Vic and NSW represent approx 60% of Australia’s population, and take the greatest share of NG used in private residences. To note in the overall picture it may surprise to note residential use is a relatively small proportion of demand.
The impact of NG prices on NG used in domestic industry and power generation adds more to consumer costs than any grumbles we might have about residential prices. If there is a good reason to complain about electricity prices, the impacts on baked goods or just everyday fertiliser, the pie chart shows it as it is. Some consumers only see the flow on from the effect on electricity and producers of products/goods dependent on gas supplies. Those in the SE of Aust (Vic & NSW) get a double dose through the monthly home gas bill.
Any solution needs to look well beyond the every day residential and consumer needs of Vic and NSW. The other 91% of the need. The industry solution - there is one is a political question. One that is asking for the development of gas fields where the environmental risks have been unacceptable.
How does PRRT work? Very badly at the moment, but it is a tax, or levy imposed on producers. Not a leap to see that a Gov in control of taxes could not change it to increase the tax on exports, and exempt the tax on local sales.
Who pays for it? The buyer of course. Seems Japan is onselling their unneeded LNG to other countries. Why not sell this gas allotment to Australian wholesalers at a small profit rather than go to all the trouble of loading it onto ships, and then send it off to other countries who may well take it off their hands for little more than the outrageously low price per Petajoule that the long term buyers pay for it.
I think it worth noting that much of the conventional gas production in NT is hardly conventional. It has to be accessed using ‘fracking’ rock formations.
A technique allowed in NT and QLD ( although QLD doesn’t need it with their huge amounts of CSG) but not allowed in pretty much every other place in Aus. For good reason.
And poor old Victoria. Bass strait oil running out that nobody wants. The refineries are all gone. There is gas, but running out. Lots of coal, but brown coal that nobody wants except the electricity generators, and they are shutting down. No black coal, or even CSG found after lots of searching. And a ban on fracking…
Another thing:
Gas sold overseas from six of Australia’s 10 liquefied natural gas (LNG) export facilities pay no royalties to state or federal governments, amounting to a sum of $13.3 billion in foregone royalty revenue during the past four years, according to the Australia Institute.
…
“In the last four years alone, Australians have given away the gas that made $149 billion worth of LNG, for free,” the Australia Institute report said.
…
“Qatar exports almost the same amount of LNG as Australia along with a slightly larger oil industry. On an energy basis, Qatar produces 50 per cent more oil and gas than Australia. However, the revenue received by Qatar from its oil and gas industry is six times greater.”
On the other hand:
Australian Energy Producers chief executive Samantha McCulloch said the claim Australia’s gas resources are given away “for free” is a deliberate misrepresentation of a sector critical to Australia’s economy.
“The fact is that Australia’s oil and gas industry has invested more than $400 billion over the past decade or so to find and develop Australia’s natural gas resources,” Ms McCulloch said in a statement.
These are possible solutions at first glance but I would like to see qualified legal and economic opinion as to whether they would actually work the way described with no serious negative side effects.
