LNG imports will spark price hike, says Santos

SANTOS says plans to import liquefied natural gas will trigger a price hike and supply squeeze, ensuring foreign operators “have a gun to the head” of local manufacturers.

The oil and gas producer, which is targeting the development of its $3.6 billion Narrabri coal seam gas project in NSW, said developing the country’s domestic hydrocarbon reserves would lower prices, rather than relying on import plants which are to start receiving gas in 2020.

“Importing gas ... is a certain way of ensuring that at some time in the future foreign suppliers would have a gun to the head of Australian manufacturers,” Santos managing director Kevin Gallagher said yesterday.

Five competing LNG import projects have been proposed for the east coast of Australia to arrest a shortfall of gas for domestic users as cheap volumes from traditional sources like Victoria’s Bass Strait begin to decline.

At the same time, new sources of supply including Queensland’s coal seam gas deposits are being largely shipped to customers in Asia exposing the east coast market to international pricing.

Santos, which operates the Gladstone LNG export plant in Queensland, said the nation should focus on tapping its own gas reserves.

“Import terminals are not the answer,” Mr Gallagher said. “The only way to have an energy advantage over other countries is to put in place strict environmental standards so you can safely produce as much of your own energy resources as you can at as low a price as you can.”

Traditional gas prices of $3 to $4 a gigajoule for Australian manufacturers have risen to between $8 and $10 a gigajoule.