Warning on false gas hope

ORIGIN Energy has warned against unrealistic expectations for domestic gas prices.

The company, which operates the $25bn APLNG gas export project in Queensland, cautioned against any regulatory moves at its annual general meeting yesterday.

“We continue to caution against arbitrary or unrealistic gas price expectations, noting the cost of domestic gas must reflect the lifecycle cost of production, and that gas producers, like any company, should be able to earn a return on the significant capital required to bring gas supply to market,” Origin chief executive Frank Calabria said.

The Morrison government is preparing to “strengthen price commitments” as it looks to negotiate a new heads of agreement with Queensland gas exporters including Origin to ensure sufficient supplies at affordable prices are available to the market. Andrew Liveris, an adviser to the Morrison government, has targeted $4 a gigajoule gas as an achievable target for the east coast market despite producers rejecting it as an unrealistic price, raising concern the government may look to set a price target for gas producers.

At the AGM, Mr Calabria also said he expected earnings from Origin’s core energy markets division would decline by up to 21 per cent, or $309m, to a range of $1.15bn to $1.3bn in the 2021 financial year, from $1.459bn in 2020.

APLNG production was also estimated to be as much as 8 per cent lower at 650-680 petajoules due to lower demand as the Asian LNG glut dampens the market.

In his last outing as chairman, Gordon Cairns said Origin’s depressed share price remained his biggest disappointment.

“Despite the strong operational performance over recent times, the share price is not where we would like it to be,” he said. Origin shares closed 1.8 per cent lower at $4.46.