Liquefied Natural Gas Exports in Australia to Face Review Amidst Oil Crisis

liquefied natural gas exports
Image Source: warrenski, CC BY-SA 2.0

The Australian Competition & Consumer Commission (ACCC) recently announced that the export of liquefied natural gas from the country’s domestic market must be reviewed amidst the oil crisis due to high wholesale prices.

The proposal was brought up by the ACCC ahead of a meeting between energy producers and Australian Prime Minister Malcolm Turnbull over potential gas shortages experienced by the country. Specifically, the main subject of the review is the $18.5-billion Gladstone LNG project, which is led by Santos Ltd. and exports third-party gas. As it has been pointed out by the consultancy firm Wood Mackenzie Ltd., the project is planning to buy more than 20% of liquefied natural gas from other suppliers on Australia’s east coast this 2017 because it is experiencing shortages in its own fields.

Commenting on this matter in an interview, ACCC chairperson Rod Sims said:

“GLNG was clearly short of gas and has had to buy it from the domestic market to meet its overseas contracts. The purchases by Santos, along with state bans on drilling, has created a crisis for Australian manufacturing, which does need to be addressed.”

The Australian Industry Group denotes that the supply deficit is a primary cause of spot prices of wholesale gas in the country to triple in the last two years. Now the group is also calling to restrict exports to Asia.

Sharing his opinion on this, Turnbull stated:

“It is not acceptable for Australia to be shortly the world’s largest exporter of LNG and yet to have a gas shortage on the east coast in its domestic market. We will defend the energy security of Australians and reliable and affordable gas supply is a key part of that.”