This is what happens when you appease a cartel. The cartel’s mouthpiece yesterday threatened to black out the East Coast:
Without new gas supply, eastern Australia faces an increased the risk of blackouts, disruptions and higher energy bills – especially in Victoria and NSW.
It is no coincidence that these are the same states where successive governments have stifled exploration and development of new gas projects.
…Major investments in new gas supply were put on hold for more than a year following heavy-handed gas market interventions, while the perennial threat of interrupting export contracts has damaged Australia’s reputation with investors and trade partners.
Three-quarters of East Coast gas is shipped to China. What is it doing with it? Nothing:
The government doesn’t publish nationwide figures on inventory, but recent releases from major storage hubs indicate that increased volumes have been injected into the subterranean caverns that supply its cities. Those caves are also getting bigger as old oil wells are repurposed to house more of the cleaner-burning fuel.
Gas injections in China typically run from April through September, to meet withdrawals over the colder months when the fuel is most needed. The Huabei site, which serves Beijing, had stored 2 billion cubic meters by the end of August, according to the Shanghai Petroleum and Natural Gas Exchange.
That’s 83% of the facility’s annual target, and equal to last year’s injections with still a month to go. The site has doubled in volume over the past six years and will be expanded again this winter. China’s largest storage facility at Hutubi in Xinjiang’s gas fields in western China, and the Dagang facility in the northern port of Tianjin, have also seen a rapid pace of injections to record levels this year, according to local media.
What will it do next? Sell it:
China has ramped up its total gas imports so far this year and has built a high level of stockpiled gas as it looks to avoid a supply crunch when global markets tighten this winter.
They are set to tighten, especially if the winter in Europe and north Asia is cold. The end of the Russia-Ukraine gas transit deal on December 31, 2024, could trigger a run on LNG cargoes in Europe.
With a lot of gas in storage, China could once again turn to reselling LNG cargoes to Europe if Chinese importers and authorities feel the world’s second-largest economy is not threatened by a gas supply crunch.
So, as the East Coast cartel threatens to black out Australia, it is feeding massive quantities of excess gas to China, which will be resold to Europe, which is under pressure from curtailed supply from Russia, China’s ally.
As well as taking three-quarters of East Coast gas, QLD LNG plants are also partnered with two Chinese petroleum giants in Sinopec and CNOOC. These are not private firms. They operate as state owned enterprises serving the interests of the CCP.
The East Coast gas cartel is literally an economic fifth column acting in the interests of the Chinese Communist Party.
Yet it has the temerity to use its own bad behavior as an excuse to bully the Australian sovereign.
This is fucking overreach.
What is a government to do when a hostile nation takes effective control of domestic assets and smashes its economy?
Smash it back twice as hard, of course.
Canberra’s cowards must crawl out from under the desk and punch the gas cartel in the head.
It can be done actively by summoning the CEOs to Canberra to renegotiate export contracts.
Or it can done passively by applying an export levy on all gas exports above $6Gj.
Either way, it must be done.
Or this nightmare will destroy the economy permanently.
