Australian gas cheap for export customers, expensive for local manufacturers

Image: Siluria

Australian industrial customers have seen gas prices nearly double and these are expecting to worsen, with the possibility of shortages, while the commodity is being exported at cheap prices to Asian customers.

ABC’s The Business reported on the concerns of many manufacturers, who have seen the long run wholesale average price at $3 or $4 a gigajoule rise to $6 or $7 – with spikes of up to $20 – while exported Australian gas causes a regional glut. Export customers are predicted to have cheap Australian gas until at least 2022, according to the story.

Three major LNG plants on Queensland’s Curtis Island, for example, are contracted to provide export LNG.

“We’ve had the Gladstone LNG projects come online, we’ve got a collapse in the oil price which means exploration isn’t taking place and then we’ve got these moratoriums on onshore gas development preventing us from getting access to conventional onshore gas,” Qenos managing director Jonathan Clancy told the ABC

He called the situation a “perfect storm”, and expects local prices to increase another 50 per cent.

Expensive local prices as the result of major LNG export projects coming online have been predicted for several years.

A 2012 report released by the Plastics and Chemical Industries Association and Australian Industry Group, for example, warned of price spikes and questioned whether “the supply of natural gas will be sufficient in coming years to meet both export commitments and domestic needs”.