APPEA says AWU LNG export report “disconnected from economic reality”

The Australian Petroleum Production and Exploration Association has hit back at a report by the Australian Workers Union suggesting stricter liquefied natural gas LNG (export) restrictions.

The “Shipping Away Our Competitive Advantage” report released on Monday “confirms that the AWU’s campaign to control gas exports is disconnected from economic reality,” APPEA said in a statement.

“The AWU report’s central claims do not withstand scrutiny,” said APPEA Chief Executive Malcolm Roberts.

According to Roberts, the report ignores the latest data, such as the gas price trends report to the Council of Australian Governments (COAG) and the December 2017 report from the Australian Competition and Consumer Commission (ACCC).

“These reports show that wholesale gas prices began to fall in 2017 across all east coast states. The AWU writes about $22/GJ gas, but the COAG report finds that east coast wholesale prices average $9.19,” he said.

“The AWU also peddles a tired line about Australians paying more for gas than other countries. Again, the facts don’t support this claim. The International Gas Union’s annual global survey of wholesale prices places Australia 26th of 52 countries, with lower prices than major customers Japan, South Korea and China, and its two regional LNG export competitors, Malaysia and Indonesia,” he said.

He went on to say that export controls would only discourage investment in developing new gas supplies.

“The AWU’s protectionist approach would do nothing to expand supply or reduce the cost of new supply. Its flawed premise is that the LNG industry is a risk to domestic supply when, in fact, the industry has underwritten, directly or indirectly, most of the new gas developed over the last decade,” Roberts said.

The massive investment in east coast LNG projects brought the capital and technology to turn coal seam gas from an interesting idea into the main source of gas for local customers in eastern Australia.

Roberts said the union should support the immediate removal of state government bans on natural gas projects rather than demand political intervention to restrict gas exports.

“It is no coincidence that Victoria, which has banned all onshore gas development, now has the most expensive wholesale gas in the market,” he said.

“The ACCC warned last year that southern states would continue to pay a premium for relying on Queensland gas – up to $4GJ in additional transportation costs, Roberts said.

“The obvious solution is for Victoria and New South Wales to develop their own substantial gas resources. More supply – and more suppliers – will put downward pressure on prices,” he added.

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