Industry insiders are reportedly taking a negative view of the proposed gas pipeline linking Western Australia with the East Coast market, saying it will struggle to deliver gas at competitive prices.
According to an AFR report, Wood Mackenzie’s Saul Kavonic was one of several ‘in-the-know’ analysts to cast a pall over a plan which reportedly has the backing of federal resources minister Matt Canavan, as a potential solution to the gas pricing crisis gripping East Coast consumers.
Kavonic is among a growing group of commentators who reportedly believe the pipeline has little-to-no chance of getting off the ground without significant government funding assistance.
“A west-east gas pipeline would not be able to deliver gas competitively to the East Coast without heavy government subsidies,” he was quoted by the AFR.
“With a large LNG export industry on the West Coast, it would be far more efficient to deliver any gas from west to east via LNG [ships] than a new pipeline.”
The Federal Budget, handed down on May 9, set aside $3.7 million for a feasibility study into the pipeline, with Treasury officials estimating a price tag of around $3 billion for the project.
But according to JPMorgan analyst Mark Busuttil, who also spoke with Fairfax, a 3000 kilometre pipeline would cost over $5 billion.