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LNG Fires Flaring Over Australia
Today’s article will wade into the shifty and dangerous swirls of Australia’s oil and gas politics. Up for grabs are billions in royalties and earnings. But it may also be a tale of price spikes and lost jobs. In other words, it could get ugly.
But let’s hope not. NSW Treasurer Mike Baird set the agenda early in the week. He pointed out that NSW’s contracted natural gas supplies are running out. That left some big questions hanging in the air: where will the replacement gas come from, and just as important, at what cost?
The answer to the second question is most likely higher. Take this fromThe Australian:
‘The Abbott government is preparing for urgent meetings with the states to prevent a spike in energy prices from a looming gas shortage, as NSW admits that companies could go broke if the problem is not fixed.
‘Industry Minister Ian Macfarlane has made energy security a top priority as he tries to unlock more supplies, telling The Australian that “every molecule” should be extracted whenever possible.‘
According to the Australian Financial Review, NSW sources 95% of its gas from other states. So it has a choice: pay more or develop its own supply.
Paying more is about to get expensive. The contracted supply to NSW is set to dry up just as the LNG terminals around Gladstone, Queensland begin to fire up, sending fresh LNG supply over the ocean to Asia. That’s expected to triple east coast natural gas demand, soaking up spare gas from South Australia and Queensland. It could double the domestic price, at the least…
Read the rest of this article at The Daily Reckoning
