Gas operation GLNG rejects claims of a domestic supply shortfall on the east coast this winter
The Santos-led GLNG venture which exports gas out of Queensland has disputed forecasts of energy shortfalls this winter.
Fears of a gas shortfall hitting the east coast this winter has sparked a retaliation from the Santos-led GLNG export venture, which said some gas from the three Queensland LNG projects had not been taken into account and would prove sufficient to bridge any domestic gap.
Energy officials last week forecast the risk of gas shortfalls under extreme weather conditions from every winter until 2026 in NSW, Victoria, Tasmania, South Australia and the ACT, at a time when average consumer demand can jump up to three times higher than summer.
The Australian Energy Market Operator also pointed to a fresh squeeze for the three Queensland LNG exporters, including GLNG, which already face tighter scrutiny from the federal government over supplying into domestic markets.
But GLNG said the report had not taken into account all supplies from the export ventures. The venture – which has Malaysia’s Petronas and France’s Total as partners – said GLNG’s “reshaping” of contracted export deliveries to Asia during 2023 would result in additional supply of up to 100 terajoules a day of gas to meet peak winter demand on the east coast.
“Since AEMO collected its data late last year, there have been no spot LNG sales out of Gladstone in 2023 and, when combined with the 20 plus PJ of domestic sales reported to have been made by the other two Queensland LNG exporters, it looks like any potential shortfall has already been fully mitigated,” GLNG chief executive Stephen Harty said.
A heads of agreement reached in September 2022 resulted in LNG exporters agreeing to provide an extra 157 petajoules for the domestic market this year and charge domestic users no higher than international customers.
AEMO last week said in its gas statement of opportunities report that existing policy tools – including the heads of agreement with LNG exporters which offers additional gas into the east coast market – would help in managing supplies for users.
However, Federal Resources Minister Madeleine King on Sunday said the AEMO report did not take into account the 157 PJ of supply commitments from exporters.
“The negotiations I led ensured additional gas supply, improved security and affordability of domestic gas supplies in future years and also introduced transparency measures to improve the information available to customers,” Ms King said.
“The data in the AEMO report does not account for the extra 157 PJ committed under the heads of agreement.”
The three LNG plants owned by Santos, Shell and Origin Energy are currently controlled by the Australian Domestic Gas Security Mechanism, which gives the government power to halt LNG exports if a domestic shortfall year has been declared.
Reforms to the mechanism, due to start on April 1, means a decision to activate the trigger will be reviewed every three months rather than annually.
The industry is already on edge as Labor moves to revamp the gas industry’s code of conduct to cut prices, while unions say the government has not done enough to bring energy costs down for manufacturers.
GLNG called for an effective set of policies for the industry.
“It is critical that barriers to new gas supply investment right across the east coast
are addressed and removed, and that Australian governments ensure there is an effective
and appropriate regulatory regime for new gas supply investment on the east coast,” Mr Harty said.
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