Cartel King should be sacked.
The Australian Government will not activate the Australian Domestic Gas Security Mechanism (ADGSM) for the April to June 2025 quarter.
The Minister for Resources’ decision was informed by the Australian Competition and Consumer Commission’s (ACCC) December 2024 interim gas inquiry report and additional information on the Western Australian gas market.
The ACCC report forecasts enough gas across the east coast to meet domestic demand from April to June 2025, even if liquified natural gas (LNG) producers export all their uncontracted gas.
Really? Here’s what the ACCC actually said.
“The latest projections for 2025 suggest that the east coast will be in surplus in each quarter next year, including in the winter months when demand for gas is typically at its highest,” Ms Brakey said.
“While there is likely to be sufficient overall supply across the east coast in 2025, the southern states are projected to be in shortfall over the winter months and will continue to rely on gas from Queensland or from storage to meet peaks in demand.”
In short, there will be a surplus of gas for the export cartel to sell overseas while the southern states will be short.
This will hand even more pricing power to the gas export cartel guaranteeing that the gas price shock that is already underway will worsen considerably in the winter.
Indeed, the international gas situation is deteriorating, from Goldman.
- NW European tightening from Ukraine flow halt modest so far… We estimate that the halt in Russian gas flows from 42 mcm/d to zero from January 1st, which had been our base case and largely market consensus, represents a net tightening to NW Europe gas balances in the order of 16 mcm/d (2.7% of our 2025 expected demand in the region). To be clear, while NW Europe was not receiving any of that gas, we expect Austria to rely on pipeline imports from Germany to cover its gas demand1 and potentially additional marginal flows to complement Slovakia’s needs. Preliminary data for January 1st show German gas exports to Austria up by 9 mcm/d on the day.
- …especially when compared to significantly colder-than-average weather forecasts. A more significant and surprising tightening driver of January gas balances are the much-colder-than-average temperatures currently forecast for NW Europe for the next two weeks, over 4°C below the ten-year average. If realized, we estimate such low temperatures would lift NW European gas demand by more than 100 mcm/d in January.
- Stock-out risks are low, but storage refill, a challenge. To be clear, we see risks of an inventory stock-out as very low, even under such a cold weather forecast. The main challenge for Europe is that the lower that end-March storage levels are, the harder it will be for the region to refill ahead of the next winter. Specifically, under the colder-than-average scenario that is currently forecast, and assuming no offsets elsewhere in the balance, we would estimate end-Mar25 inventory levels to drop to 30% full (vs 35% under average weather). This would imply end-Oct25 storage levels in the low 80s% (vs high 80s% under average weather), well below the 90% full EU requirement. More specifically, we estimate this scenario would create a 21 mcm/d deficit in the market during the 2025 summer (relative to the 90% full EU storage target).
Current Australian gas prices are $13Gj, 400% above historical averages, in the off-season!
As a direct consequence, power prices are up 150% year on year, in the off-season!
This already means the AER is going to hike utility bills again in 2025/26.
When we hit winter, gas and power prices will go berserk, and the prices for 26/27 will be much higher again as gas imports become the marginal price setter.
Meanwhile, gas pipelines running south from QLD are nearly empty (SWQP being the critical pipe):
While southern storage is about 20% the capacity it should be.
All we need is to build out Iona and fill it in the off-season with QLD gas.
Just like Europe, Asia and the US do.
Instead, Cartel King is focused on a post-politics sinecure with her gas masters and not upsetting anybody before the election.
It is ribald, unadulterated, treasonous nation-destroying corruption.
