Globally competitive gas remains critical for Australian manufacturing


Chemistry Australia has indicated that a tight supply and surging prices for gas feedstock and energy remain a concern for Australia’s critical manufacturing industries. 

The Australian economy faces a perfect storm of soaring Asian LNG spot prices and high global oil prices, Chemistry Australia CEO Samantha Read said. 

“We note the release of the ACCC LNG Netback decision and the introduction of a five-year LNG netback oil linked price series, focused on assisting longer term gas contract needs,” Read said. 

“At a time of unprecedented domestic supply tightness and rapidly changing global market dynamics, we also note the missed opportunity to go further in providing domestic gas users with a greater level of transparency to support the negotiation of these longer-term contracts.” 

Soaring energy prices that have affected the European manufacturing sector in recent weeks are also a real issue for Australia. 

“The stresses in the east coast gas market both in terms of supply and price are clear for all to see,” Read said. 

“COVID-19 placed a great strain on supply chains and domestic self-sufficiency. The stresses on the east coast are now challenging our own domestic manufacturing security, which support many industries from mining, agriculture, food and packaging.” 

At the end of September, the ACCC’s LNG netback series forecast a record gas price in February 2022 of $30 per GJ at Queensland’s Wallumbilla Gas Hub, due to soaring Asian LNG gas prices. 

In its July Gas Inquiry Report, the ACCC said Australia’s 540 petajoule east coast domestic gas market could face a shortfall in the year ahead, if the Queensland LNG producers exported all their 101 petajoules of excess gas above their 1341 PJ of export commitments. 

“Australia’s critical chemical and plastics manufacturing infrastructure requires globally competitive inputs to support ongoing investment of mobile global capital,” Read said. 

“If Australia is to make the most of hydrogen, green ammonia and advanced recycling opportunities, then governments and policy makers, gas producers and industry will need to work together on the transition to get there. 

“Ensuring gas is offered at a fair and globally competitive price in the domestic market is key to the investment needed for employment and a low-carbon future.” 

Chemistry Australia will continue to work with governments and industry on solutions to the gas crisis and retain Australia’s sovereign manufacturing capability.