Tuesday 24th Oct, 2017

Gas prices spike as PM, producers strike deal

Photo: Shutterstock
Photo: Shutterstock

Spot prices for gas in Asian markets rose dramatically this week, after Queensland’s major LNG exporters agreed to reserve enough gas for Australia’s domestic market to avoid energy shortfalls.

The price of gas rose to US$8.348 per million British thermal units this week, up significantly compared to US$6.187 a month ago.

While some analysts have suggested the Asian spot price may just be undergoing its seasonal rise, others have pointed to a direct correlation between the 35% price increase in the last month, and Malcolm Turnbull’s continued push during that same timeframe to reach an agreement with Queensland’s major gas exporters – an agreement signed this week.

Spot prices for Asian markets reached the equivalent of (Australian) $10.70 a gigajoule on Tuesday, compared to $5.01 in Victoria, and $6.75 in Sydney.

Signing the Heads of Agreement deal with the gas producers at Parliament House on Tuesday, Prime Minister Turnbull thanked the three executives for their cooperation.

“The commitment today … is to offer sufficient gas to meet the expected shortfall and any emerging shortfall through the good faith offering of gas to the domestic market on reasonable terms,” Turnbull said.

“These commitments are vitally important to ensure Australian jobs and to ensure Australians have affordable and reliable energy and including electricity – gas being a more important fuel than ever in the generation of electricity.”

Representing the Queensland gas producers, Shall Australia’s country chair Zoe Yujnovich said the group appreciated the “constructive dialogue” it has had with the PM.

“There have been some difficult and tense moments and we appreciate the challenge that you’ve given us,” Yujnovich said.

“We hope that through the Heads of Agreement, indeed we can find a path forward to make sure that the domestic market is serviced and that indeed there is enough available gas for the market, which we stand behind and are committed to deliver.”