Speaking at the Australian Domestic Gas Outlook (ADGO) 2022 conference
in March 2022 ANGUS TAYLOR MP noted that the last few years have been a testing time for global energy markets.
Speaking about Europe’s energy security, he said that gas prices in the United Kingdom and Europe have increased by more than 300 per cent over the past 12 months. In early March, they beat previous highs hitting the equivalent of more than $85 Australian dollars per gigajoule.
With Russian gas accounting for around 32 per cent of total European and UK gas consumption in 2021, the full impact of the current crisis remains to be seen.
Europe’s experience has not been repeated in Australia. As a result of industry and government working together, Australia has avoided the price increases seen abroad. While Asian spot gas prices are significantly elevated, domestic Australian East coast spot gas prices have not followed. In the middle of March this year, domestic spot prices were up to 77 per cent lower than in Asia and Europe respectively. The gap between the East Coast spot price and the ACCC netback price remains one of the largest divergences since the netback was first published in 2016, with the April netback currently around 79 per cent higher. These low gas prices have remained even while Australia has been exporting record levels of gas to assist liquidity overseas.
Latest ABS statistics shows that LNG export earnings totalled almost $53 billion for the 12 months to January, up 52 per cent on the previous year. Australian exporters will continue to supply LNG overseas through their long-standing contracts. The world counts on Australia and our gas companies to export energy security. It is critical that this is done while ensuring Australian gas continues to work for consumers here at home.
Gas makes up 42 per cent of the total energy use in Australian manufacturing sector. Gas consumption has been increasing significantly in the mining sector and now constitutes close to 49 per cent of the sector’s final energy consumption nationally. In absolute terms, the sector’s total natural gas consumption is up 71 per cent in five years. As more renewable generation enters the grid at world-leading rates, the importance of reliable, dispatchable gas-powered generation continues to grow.
Local production must increase or consumers will face higher prices and disruptions in supply. The ACCC is forecasting southern supply gas shortfalls from 2024 to 2030, and an east-coast wide shortfall from 2027.
National Gas Infrastructure Plan shows that Australia needs at least one new basin online before 2030 to avoid future shortfalls. These basins include the Narrabri project in NSW, the world-class Beetaloo Sub-basin in the Northern Territory and the Galilee and North Bowen basin in Queensland.
Full version of Minister Taylor's speech cab accessed here.