Honestly, not even The Australian can make this sound threatening:
Shell said proposed changes to the ADGSM would make matters worse for the sector and hit back at the way big users had campaigned on the mechanism.
“Rather than act as an enabler to encourage greater investment and supply in additional gas development, over time the ADGSM has provided a convenient cover for some sections of the community to hold the Queensland LNG projects publicly and incorrectly accountable for providing the Australian east coast’s gas supply, pricing, and security solution,” Shell said in its submission to government.
“Though the ADGSM provides confidence to a proportion of gas users that supply is available, the ongoing ‘pull the trigger’ rhetoric has consistently fuelled market expectation that LNG projects have an uncapped capacity to solve all issues of supply security. This mechanism, by its very existence, has introduced complacency and has rewarded not very prudent energy procurement by large customers. I.e. in the hope (and through regulations) that there will be limitless supply and at low prices which is not the energy reality anywhere in the world.”
“Recent market interventions (particularly the proposed Mandatory Code and “reasonable” pricing mechanism) are only expected to exacerbate these shortfalls. Key states with large populations and manufacturing bases have continued to resist the development of new sources of supply and a significant number of gas customers have been conditioned to wait for intervention and the hope of better prices, rather than contracting for long-term supply.”
…“Shell urges the government to reconsider the architecture of the mechanism in order to provide security for all long-term export contracts. This will signal to investors and trading partners that Australia is a stable and reliable investment destination.”
No, it won’t. It will, once again, embed supply risk for Australia, which is neither economically nor politically sustainable. Therefore, neither is it “sustainable nor reliable” for export customers.
The answer here is simple. The gas cartel has to accept the new ADGSM and act accordingly. If this means accelerating gas production or renegotiating some export contracts then so be it. This happens all of the time.
Shell played its part in the creation of the gas cartel when it consolidated the assets of BG and Arrow. It is not innocent.
Even today, it is lying. Every other gas supplier on earth has cheap and boundless energy because of reservation. Even subaltern EMs like Mozambique and Trinidad & Tobago. Reservation and boundless cheap energy are the norms for producers.
And Australia still has immense cheap gas reserves. The issue is the gas cartel has consolidated them under one effective entity, on behalf of China, which takes nearly three-quarters of it:
In fact, Chinese petro-giant, CNOOC owns 50% of one of Shell’s QLD LNG trains. If needs be, Shell can renegotiate contracts with it and fall into line with the new ADGSM. Or just accelerate gas production to supply both. Hoocoodanode!
In even better news, JKM Asian LNG futures just won’t stop falling and coal will follow:
And Aussie electricity prices are back at post-fuel price cap lows:
These prices should also keep falling.
