Local gas users alarmed by LNG export move
Manufacturers are unsettled by the Morrison government’s claim that Australian LNG exporters would be ready to fill energy shortages across Europe if Russia cut off gas supplies.
Manufacturing businesses are unsettled by the Morrison government’s claim that Australian LNG exporters would be ready to fill energy shortages across Europe if Russia cut off gas supplies.
Energy Users Association chief executive Andrew Richards said big Australian gas users would be concerned if international users were given priority over locals.
“These gas buyers will always be nervous when they see comments like that. Typically, in the past, domestic prices have followed those international prices,” he said. “It unsettles (local gas users) because it looks like international customers have been given priority over domestic customers. If we maximise exports then the domestic market is collateral damage.
“It is all well and good to look after your friends abroad but don’t forget your friends at home, which is your domestic customers.”
European nations on average draw more than 40 per cent of their gas imports from Russia, sparking growing concerns that Moscow could limit supply to the continent in response to the Ukraine tensions.
Resources Minister Keith Pitt said Australia “stands ready to support its friends and allies”.
“We have a well-developed gas resource. We have the capacity to deliver not only domestically but right across the world,” Mr Pitt said.
“We will, of course, continue to meet our contract demands for those arrangements that are already in place and deliver the domestic supply that is necessary for industry in this country and, of course, look for spot cargo opportunities elsewhere.
“We have not received any formal requests for us to deliver that gas to any other locations. But, of course, Australia does stand ready to deliver where necessary.”
Before the government’s pledge to Europe, Mr Richards said there was growing optimism that domestic gas prices were being decoupled from the international benchmark.
He said businesses were securing gas for between $7.50 and $8.50 a gigajoule, compared with the international benchmark of about $20 a gigajoule.
“What we have seen in the last 12 months is a bit of a separation between what is going on internationally on pricing and what we are seeing domestically on pricing, which has been a really good thing,” Mr Richards said.
“That has potentially come about because there is a bright spotlight on the gas industry to make sure they are doing the right thing. That has driven a lot of this revised behaviour.”
Australian Workers Union national secretary Daniel Walton said the price of gas “continued to increase … Australia could be a manufacturing powerhouse with cheap and affordable energy but we have lost that competitive advantage and the government doesn’t seem to want to do anything to address it.”
Grattan Institute energy program director Tony Wood said Australian gas suppliers did not necessarily have the capacity to “ramp up very quickly” because of existing contracts.
“It doesn’t mean that Australia actually supplies its gas to Europe, Australia is a long way away from Europe,” Mr Wood told the ABC.
“It could mean that gas that would otherwise go to Asia is diverted to Europe and then Australian gas replaces that gas in Asia.”
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