Manufacturing News

Crunch time for gas users, with possible cut-offs in peak period predicted

Australian industrial gas users are seeing prices doubling – if they can get contracts at all – with the next two years cited by Manufacturing Australia as a “crunch point” for customers.

The Australian Financial Review reports that one company, Victoria Wool Processors, had its gas contract expire last year. The company then had to accept a doubling in price in its new contract with Origin Energy for 100,000 gigajoules annually.

General manager David Ritchie told the AFR that four retailers were approached, though only one would offer a contract.

“There was only one who could offer: it’s not negotiations – you take this or you don’t get any gas at all,” he said.

Other large-scale users have reported big increases in contract prices. Simplot, for example, said last month that it would see “a cost increase of 60 per cent over three years” over three years in Tasmania, worth $4 million.


Mark Chellew of lobby group Manufacturing Australia said the “crunch point” for supplies would be reached between the year’s second half and late-2018, and there were concerns that curtailments would exist in peak periods. According to this scenario, consumers would be favoured over industrial customers, who would be cut off.

The oil and gas industry has blamed the inability to develop gas reserves in NSW and Victoria for the local shortage. There are moratoriums on unconventional onshore gas exploration within both states.

Australia’s gas export industry, however, is set to boom.

LNG exports – mainly to Asia – are tipped to be Australia’s second-biggest commodity export (by value) next year, and Australia placed to overtake Qatar as the world’s biggest LNG exporter by 2020, reports The Australian.

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