Oz Watchdog Starts Publishing LNG Netback Price
Australia’s competition watchdog has begun publication of LNG netback prices on its website in a move aimed at providing transparency for the country’s east coast gas users, who have faced rising prices in recent years and concerns of shortages, it said October 2.
“The [Australian Competition and Consumer Commission] is making this information publicly available to help fill an information gap that has existed in the east coast gas market since LNG producers in Queensland began to export gas in 2015,” it said.
The prices in the series are calculated by taking the delivered price of LNG and subtracting the costs of liquefying and shipping it to the destination port.
“Gas users have regularly commented to us that our publication of gas prices and LNG netback prices in our interim gas reports helps them in their gas supply negotiations,” ACCC chair Rod Sims said.
The watchdog noted that the LNG netback price is certainly not the sole factor that influences domestic prices in the east coast gas market. “Individual prices paid by gas users will, for example, also reflected other factors that may be relevant to their circumstances, including the terms and conditions of their gas supply and any applicable transportation or retailer charges,” it said.
LNG netback prices have increased considerably since the ACCC’s inquiry in the market commenced in April 2017, driven by an increase in global demand for gas and a weaker Australian dollar, it said.
The average LNG netback price at Australia’s Wallumbilla Gas Supply Hub has been A$10.69/GJ ($7.57/GJ) so far in 2018, compared to A$7.27/GJ over the same period in 2017 and is currently expected to be on average around A$12.40/GJ over the same period next year, the ACCC said.
“While industry analysts expect international LNG prices to ease over time with an increase in global LNG supply, conditions in the east coast gas market remain very challenging for domestic gas buyers, particularly commercial and industrial gas users,” Sims said.
The watchdog also used the opportunity to once again flag the need to produce more lower-cost gas in the region.
“While commissioning import terminals can bring additional quantities of gas into the south, greater benefit can be gained from producing additional, lower cost gas,” Sims said.
“This could mean that instead of paying import parity prices or paying to transport gas from Queensland, domestic gas users in the south could be paying prices that are closer to the cost of producing additional gas – a difference of up to about [A]$4/GJ based on current estimates,” he said.
“We continue to urge state governments to adopt policies that consider and manage risks of individual gas developments rather than implementing blanket moratoria and regulatory restrictions,” he added.