A bit more about the cost of production and the domestic market post Gladstone:
Paper titled "Gas Wholesale Supply and Pricing" given to AUSTRALIAN INSTITUTE OF ENERGY SEMINAR 25 June 2014 by Dr. R Lewis of Jacobs Worldwide www.jacobs.com
Page 11 - Gas price factors – costs of gas production
The cost of gas, including capital and operating costs, applicable to new gas supply, ignoring lower cost sources already committed, is $4.50/GJ.
This sets the lowest price at which a gas producer would sell gas in a new contract, in a very competitive market.
Page 16 - Gas price factors – market power
Market power has always been present in the Australian gas market
Market power has increased since 2008:
LNG projects have acquired smaller producers
And have withdrawn from the domestic market
In Victoria only the Gippsland JV has sold new contracts since 2008
Page 18 - New domestic wholesale contract prices
Nine new domestic contracts since 2011 under LNG influence. Price data is based on reviews of statements by seller or buyer financial analysts.
Price estimates are uncertain but the following trends seem clear:
Prices have escalated and range from $5.50/GJ to $10.00/GJ
Prices in Queensland still escalating - most recent price is $10/GJ compared to $6/GJ in 2011.
Prices in southern states, for gas from the Gippsland JV, are lower than in Queensland but may be set to escalate.
Some domestic contracts are oil-linked but others are not.
Worth Considering - Competitor For East Coast Gas Supply, page-4
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