How Australia is Facing a Riveting Scenario Over Natural Gas

Australia is gifted with natural gas, but is the supply benefiting its ordinary citizens? Australia is facing a gas shortage scenario, exposing how it has cut itself a raw deal with its own precious natural gas resource. Bruce Robertson, an Energy analyst, brought to light how Australia was allowing companies to tap the resources that belonged to Australian people and selling it overseas before making sure that its own citizens could benefit from the resource. Australia seems to be in a lose-win situation, as it is making lesser money than the big gas companies and other countries, who are selling the resource overseas for a profit.

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It was in 2014 that Mike Yeager, BHP Petroleum chief, reported that there was plenty of gas in the Bass Strait, which could supply citizens in Victoria, NSW, and Queensland, indefinitely.

Though Australia has plenty of natural gas, the gas companies on the east coast have been sending this overseas, which became more evident with the development of three LNG plants at Gladstone, Queensland. Currently, Australia is the second-largest LNG exporter in the world, providing nearly 12% of the world’s gas, and is projected to become the world’s largest exporter by 2020.

Australians are now competing with the overseas markets for the supply of their own gas. Rod Sims, ACCC chairman, reiterated that the demand for gas on the east coast had tripled naturally affecting the prices. It is reported that Victorian manufacturers were being offered one-and-two year contracts for gas at a wholesale price of around $20 per gigajoule much higher than the historical average of $3-$4.

Gas on the east coast is controlled by companies like Santos, Exxon, Origin, BHP, Arrow Energy, and Shell. The lack of competition only spells higher prices locally. It is reported that Australians are currently paying higher prices for gas than their international counterparts.

Countries like Japan place a tax on its gas imports from Australia delivering around $2.9 billion. It is also reported that Qatar, which is the world’s biggest exporter got around three times in royalties for selling nearly the same amount of gas as Australia.

Meanwhile, Prime Minister, Malcolm Turnbull, has committed to getting more gas for Australians through rounds of energy talks with the prime gas chiefs. The Prime Minister has also agreed to speed up reforms and provide more transparency to companies.

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