Gas prob­lem “not fixed”

The Australian Energy Review - - NEWS - EL­IZ­A­BETH FABRI

THE East Coast gas mar­ket is show­ing signs of im­prove­ment with in­creased do­mes­tic sup­ply and lower whole­sale prices, but is still not func­tion­ing cor­rectly, ac­cord­ing to Aus­tralia’s con­sumer watch­dog. In a sec­ond re­port to the Gov­ern­ment as part of a three year in­quiry into the gas mar­ket, the Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion (ACCC) said the East Coast was no longer at high risk of a sup­ply short­fall through 2018 (as fore­cast in ACCC’S Septem­ber re­port), af­ter Gov­ern­ment in­ter­ven­tion drove some of the na­tion’s big­gest pro­duc­ers to di­vert gas to do­mes­tic mar­kets. How­ever, it noted prices re­mained higher than they would be in a well-op­er­ated, com­pet­i­tive mar­ket. While pres­sure had eased for large com­mer­cial and in­dus­trial users, with prices fetch­ing for $8-12/GJ com­pared to $16/GJ in early 2017, the out­look for smaller com­mer­cial and in­dus­trial con­sumers “re­mained bleak”. “Some smaller C&I users have told the ACCC that they still only have one re­tailer in­ter­ested in sup­ply­ing them, and oth­ers claim they con­tinue to have no gas avail­able,” the ACCC stated. It also warned that while there is a lower like­li­hood of a sup­ply short­fall in 2018 across the mar­ket over­all, the south­ern States were still ex­pected to con­sume more gas than they pro­duced, bring­ing to light pipe­line con­straints in trans­port­ing gas south from QLD. “The gas short­fall in the south­ern states can add at least $2/GJ and pos­si­bly up to $4/ GJ to the prices paid by gas con­sumers in these states,” ACCC chair­man Rod Sims said. “The var­i­ous re­stric­tions to on­shore gas ex­plo­ration do have con­se­quences.” Fed­eral Re­sources minister Matthew Cana­van said de­spite the ev­i­dent progress that has been made, the “prob­lem’s not fixed” “Ob­vi­ously it's a very com­plex mar­ket, but one of the is­sues we've got now is that our gas pro­duc­tion is mov­ing to the north; it's mov­ing to Queens­land (it tra­di­tion­ally has come from the Bass Strait, since the 1960s – those fields are de­clin­ing),” Mr Cana­van said. “Now, there's suf­fi­cient gas there [QLD] in vol­ume terms to meet our needs, how­ever the prob­lem is it's a long way from the ex­ist­ing users of gas which are of­ten con­cen­trated around those ar­eas in the Bass Strait and South Aus­tralia where there's ac­cess to it, so they've got to take that gas a long way. “We have is­sues in the pipe­line mar­ket about ac­cess that we are pro­gress­ing by es­tab­lish­ing a new ar­bi­tra­tion frame­work. “That should bring more ca­pac­ity avail­able to peo­ple who want to trans­port gas long dis­tances and that will help the fi­nal price, the fi­nal de­liv­ered price to peo­ple in south­ern mar­kets.” The ACCC said it would con­tinue to mon­i­tor the op­er­a­tion of the gas mar­ket, with its third re­port due in March 2018.

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