This hotter-than-normal summer has put even more stress on Eastern Australia’s gas stores that are drying up. There already is a shortfall in natural gas (LNG) supplies ahead of winter.
Expect gas bills to jump due to gas supplies passing on the increased wholesale prices after the federal government’s emergency freeze on gas prices ends this winter.
Australia is one of the world’s largest gas exporters, with up to 80% of the country’s LNG being sold overseas. Gas in the Bass Strait, which supply most of the gas to Victoria and New South Wales, has dried up.
Domestic gas supply is in structural decline and future investment is uncertain. The Australian Competition and Consumer Commission (ACCC) continues to warn about the dire situation of the nation’s LNG industry in updates to its Gas Inquiry 2017 – 2030.
Shortfalls could surface as soon as next year or 2027, which is a year earlier than the industry forecast.
ACCC’s forecast supply and demand in Australia’s southern states. Source: ACCC 2017 – 2030 Gas Inquiry Report 13 December
Confirmation of the concerns can be seen in investment activities such as Andrew ‘Twiggy’ Forrest’s Squadron Energy $1 billion terminal to import LNG at Port Kembla.
Government and industry band-aid solutions are on the cards.
Australia’s state and federal energy ministers agreed in December to develop a plan to kick-start LNG imports into Victoria, NSW or South Australia. This included seeking advice on potentially underwriting the launch of one or more LNG terminals.
Western Australia’s Woodside, the largest Australian oil and gas producer, says it is too late to prevent a blowout in energy bills, blaming years of drilling restrictions for the south-eastern states without enough new gas to offset dwindling supplies from Victoria’s Bass Strait.
Woodside’s CEO Meg O’Neill referred to imports as “low hanging fruit”.
“Just think about the physics – to make LNG you have to take gas, run it through a very, very big and complex piece of equipment to make it cold, put it on a ship and send it to a receiving terminal where it gets regasified.”
“All of these steps cost money … adding to the cost to the consumer, so gas prices go up.”
Two thirds (5 million) of Australian households are connected to gas. Bills can be four times higher in winter. Despite the price freeze, domestic gas prices increased to $13.76/GJ at their highest last year, influenced by cold weather driving up demand.
Hopefully more Australians can heed the warning and switch to electricity to not only save money but not sink on the boat with so many others.
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