Australia’s east coast gas users are paying prices significantly above export parity prices according to a new report from the Australian Competition and Consumer Commission (ACCC).
The Commission said its report, Gas Inquiry 2017-2025 Interim Report, showed that prices offered to domestic gas users in late 2019 and early 2020 ranged from $8 to $11/GJ, which was not in line with the significant and sustained drop in LNG netback prices, which have been below $5.50 since May.
Chair of the ACCC, Rod Sims said the Commission was very concerned with the widening gap between domestic and export parity prices.
“Queensland LNG producers sold 18 LNG spot cargoes into international markets in late 2019 and early 2020, equivalent to more than 10 per cent of annual domestic east coast demand,” Mr Sims said.
“This gas was sold at prices substantially below domestic gas price offers, showing the importance of our continuing work to understand the drivers behind the price levels we are seeing across the domestic market,” he said.
“It is also clear that recent Australian contract gas prices do not reflect overseas forward prices.”
“I am yet to hear a compelling reason from LNG producers as to why domestic users are paying substantially higher prices than buyers in international markets.”
Mr Sims said ACCC made recommendations to address the price concerns including the extension of the existing Commonwealth Government’s Heads of Agreement with LNG producers, due to expire at the end of 2020.
“As well as extending this Heads of Agreement, we think the Government should consider strengthening the agreement’s price commitments,” he said.
“Further measures are also needed to ensure adequate supply of appropriately priced gas over the longer term,” Mr Sims said.
The ACCC’s 108-page Interim Report can be accessed at this PS News link.
