Queensland producers commit to cover Australian gas shortfall

Australia’s prime minister Malcolm Turnbull said the government received guarantee from the three liquefied natural gas (LNG) exporters, Origin, Santos and Shell they will cover the expected gas demand shortfall in 2018. 

Speaking to the media following the meeting with the representatives of the three companies, Turnbull said they have indicated or stated that they will provide a similar guarantee over two years, adding the details will be discussed during another meeting set for next week.

During the meeting, Origin, Santos and Shell stated that the domestic customers will have the priority over any uncontracted gas in the future.

In addition, they have committed to provide regular reporting to the ACCC on sales, offers by them to sell gas and bids to buy gas from customers that they have declined, Turnbull said.

Australian Energy Market Operator expects additional gas requirements of up to 107 petajoules in 2018. AEMO identified 54 petajoules as an expected shortfall which could rise to 107 depending on weather and industry conditions.

Turnbull said that the government will look to sign an agreement or a heads of agreement during the next meeting to ensure a creation of an effective gas market on Australia’s east coast.

He added that no guarantees have been provided on gas price, noting they will vary with the global gas prices. In addition, Turnbull said that the failure of the of Victoria and New South Wales to unlock their onshore gas resources means that more gas will have to be shipped south at greater expense, meaning gas price will be higher for Victorians and residents of New South Wales than for the Queensland customers where the majority of gas is produced.