What is the worst idea you can think of for Australia’s failed East Coast gas market?
How about government’s underwriting LNG imports that will raise your bills 80%?
You got it! The Australian.
A Victorian government-led proposal to underwrite LNG imports could hike domestic gas prices and introduce a fresh risk of political intervention in the market, investors and energy experts have warned.
The push for the commonwealth to underpin importing LNG into Australia for the first time will be presented to federal and state energy ministers on Friday in a major intervention aimed at fixing looming gas shortfalls on the east coast.
But whose idea is it, really?
Government support for LNG imports is needed, according to the Grattan Institute’s Tony Wood, given the financial risk of a plant investment had proven to be too high for a “simple” commercial solution.
“The solution requires the financial support of governments to underwrite this risk, a commercial arrangement to import and trade the gas, a commercial agreement around operating the import terminals, and a role for AEMO as market operator,” said Mr Wood, Grattan’s program director for energy and climate change.
“This role may include a strategic reserve and a demand response mechanism, similar to what is used in electricity. None of this leads to cheap gas, but it doesn’t mean a return to the high prices of a few years ago.”
The Grattan Institute is sponsored by the gas cartel. Every policy suggestion it has boosts gas profits not the national interest. The VIC government appears to be slavishly captured by its ruinous ideas.
What will it mean?
However, the move faces significant opposition with the nation’s leading gas pipeline company, APA, concerned the decision to prop up imports may trigger a jump in local prices.
…It pointed to the Australian winter Asian LNG spot price of $17.81 per gigajoule in 2024 and an average Australian summer price of $21.58/GJ. APA said that compares poorly with the federal government’s own Future Gas Strategy estimates for delivering gas from the Surat, Narrabri and Beetaloo basins to Melbourne for between $9 and $13 /GJ.
“We know that if Australia relies on imported LNG, it will set the price of gas for domestic users,” APA chief executive Adam Watson said.
What are futures markets saying the cost will be? At the moment around $15-16Gj mid-winter 2028 amid a global gas glut.
In mid-winter 2026, the price will $21Gj, 60% above today’s price.
By 2028, the price will fall to about $17Gj mid-winter but only for a few years and then rise again.
If could be sufficiently cheaper if Russian gas flows resume to Europe.
Today’s eastern Australia gas price is around $13Gj.
All eastern governments are already subsidising the gas export cartel to the tune of $3bn per annum. And via other giveways.
Now they want to subsidise gas imports.
It’s absolute madness to ensure the price electricity skyrockets by 60% minimum, forcing themselves to raise bill rebates even further.
Most of the gas goes to China, which has just sent it back as a nuclear-capable flotilla circumnavigating the nation.
We are literally being taxed to fund our own destruction.
East Coast gas is a failed market requiring new rules to contain the export cartel, not subsidies everywhere to make it stronger and less visible.
Blanket gas reservation and a $7Gj export levy now!
