Australia’s east coast liquefied natural gas (LNG) exporters have signed a new deal with the federal government to help counter domestic gas supply shortages.
Representatives of the three LNG export projects on Curtis Island and the government signed an extended heads of agreement on September 30, according to a statement by the press office of resources minister Matt Canavan.
To remind, GLNG, APLNG and QCLNG signed the original heads of agreement last year to address concerns of a possible supply shortfall in 2018 and 2019.
The new deal will be in place until 2020.
Under the new deal, LNG exporters “have agreed to offer uncontracted gas to the domestic market on reasonable terms in the event of a shortfall,” the statement said.
This uncontracted gas will not be offered to the international market unless equivalent volumes of gas have first been offered to the Australian domestic gas market on competitive market terms, it said.
Australia announced last year a domestic mechanism under which it could restrict LNG exports, in a bid to ease domestic shortages which it claims have been pushing prices higher in Australia.
Minister Canavan said in the statement that “real concerns existed 18 months ago around increasing gas prices and the security of gas supplies for the domestic market.”
“Firm action by this government since then, including the establishment of a gas export control framework and the heads of agreement with LNG exporters, has helped bring domestic spot gas prices down by 25 percent and gas offer prices by more than half,” he said.
“Getting more supply into the market firms up gas security and lowers prices for our manufacturers and households. For instance, the ACCC found that prices offered for gas supply in 2019 are in the $8 to $11 a gigajoule range. That’s in stark contrast to prices offered in the first half of 2017, when domestic gas offers were above international prices, peaking at offers as high as $22 a gigajoule in March 2017,” Canavan said.