The answer to every East Coast energy problem costs only $2bn.
APA Group has detailed plans for a near-$2 billion expansion of its east coast gas grid in a bid to close off what is has described as a disastrous option of importing LNG to meet demand for the fuel in the country’s south-east.
But only $75 million of the investment has been sanctioned so far by the gas pipeline giant, and the company is depending on signing up customers for the new capacity to proceed with the rest. The project, along with other big-ticket transmission projects planned in Western Australia’s Pilbara region, could be funded partly through partnerships and asset sales.
…Watson cited government estimates that the cost of gas delivered to Melbourne by pipeline from Queensland would be between $9 and $13 a gigajoule. That compares with an average of about $17.80/GJ for LNG landed into Asia during the northern hemisphere summer, with extra costs to get it to Australia and for processing.
If we built more southern storage and used the existing pipelines during the shoulder season to fill it, we wouldn’t even need this. Look at the following.
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SWQP, MSP and VNI are the key pipelines south. They are all half or more empty every day.
Still, if you want to gold plate the capacity and shut up the vested interests, then the federal government should go in as an equity partner with APA, as well as apply domestic reservation to 15% of all gas, and an export levy set at $7Gj which would make all east coast gas…wait for it…$7Gj.
Hilariously, APA’s $11Gj average will be outdone by LNG imports if the following happens.
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Donald Trump told French President Emmanuel Macron he was doing a “great job”, with the pair hugging after a White House meeting on Monday (Tuesday AEDT) that the Europeans hope will help deal them back into the US president’s negotiations with Russian leader Vladimir Putin.
In front of reporters, Macron told Trump what he wanted to hear: that Europe knew it had to take more responsibility for its own defence, “to more fairly share the security burden that your country has been carrying for so many years”.
…Trump tried to reassure the Europeans, saying he believed Putin would accept European peacekeepers in Ukraine as part of a potential deal to end Russia’s war there. “Yeah, he will accept it,” Trump said. “I have asked him that question. Look, if we do this deal, he’s not looking for more war.”
I reckon imported LNG could be bought for $8-9Gj if the AUD were at 70 cents under circumstances in which Russian gas flowed again to Europe.
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There’s a long way to go, but it would be so Australia to lock itself into expensive local gas when imports suddenly became cheaper!
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.