‘Gas prices, supply on the mend: watchdog’
That was the heading in The Age this week, as the Australian Consumer and Competition Commission provided insight into the state of play in the East Coast gas market.
This headline observation is no news to the industry.
Just last week, we quoted market analysis noting the clear ongoing trajectory for the natural gas industry in terms of domestic supply and record exports of liquefied natural gas (LNG).
The ACCC’s commentary addressed both supply (increasing) and price (falling).
Its report said there were still impediments and that it would prefer to see prices lower to achieve what it regards as an appropriate ‘benchmark’.
What it did acknowledge was a significant increase in natural gas supply, at wholesale prices which were now as much as 50% lower than they were at the start of the year.
The ACCC gave credit to the Queensland gas producers for this significant improvement in market conditions, particularly those with new LNG export plants situated in Gladstone, Queensland.
It also noted that NSW and Victoria – this biggest consumers of natural gas – could claim no credit. On the contrary, Victoria particularly was obstructing progress on much-needed new supply because of its illogical ban on natural gas exploration.
This was a theme echoed by the Federal Resources Minister, Matt Canavan, in his response to the ACCC report.
Speaking on ABC Radio National this week, Senator Canavan singled out Victoria, which he said was “putting jobs at risk”.
Senator Canavan said as many as 55,000 manufacturing jobs were directly dependent on natural gas supply.
“It is crazy for Victoria – a traditionally strong manufacturing state – to be turning their back on their potential gas resources by imposing a moratorium on traditional, conventional development of gas,” he said.
“And this is not fracking,” he said.
“This is stuff that’s happened for more than a hundred years.”
Both Victoria and Queensland have natural gas heritage which traces back to the early 20th century.
There is no record of major environmental damage in that century of safe operations.
“That’s putting at risk a lot of jobs in manufacturing,” Senator Canavan said.
“We’re focused on trying to protect those jobs, we’ll do whatever we can to support them, but it would be a lot easier if State Governments actually developed their own resources.”
In using the plural on “Governments”, it is likely Senator Canavan was including NSW in his criticism.
NSW has been questioned for its willingness to change policy in response to anti-gas activism. The result has been the mandatory return of many exploration licences, closing down large swathes of the State to exploration – and imposing a significant cost to the taxpayer.
As we have said many times, NSW now desperately needs the proposed project at Narrabri, in the state’s north-west, to proceed – to alleviate future supply pressure and to create more downward pressure on prices.