WDS too cheap?, page-170

There isn't actually much cost-competitive gas left to develop on the East Coast. There is plenty of CSG but what's left is high-cost. There is still no sign that any Australian shale basins will actually be feasible. The political restrictions and delays in NSW and Vic didn't help but the biggest problem was that Santos sold more gas from GLNG than they had reserves for. They had to fill the gap with gas from the Cooper and buying excess gas from other LNG proponents, both of which otherwise could have gone to the domestic market.

I always find it amusing when I hear Santos bleating about how they could solve the gas crisis if they were just allowed to get Narrabri up and running. More than anyone else they are the ones who caused the gas crisis in the first place.

WA has no problems primarily because of their reservation policy. If not for that, when the fields supporting facilities like NWS go into decline they would be buying up domestic gas to plug the gap and that would push the domestic price to LNG netback parity.

If it was up to me I'd enforce a similar reservation policy on the east coast, and bugger the bleating of gas company CEOs about "sovereign risk." The volume of gas that would need to be reserved is very small compared to the volumes going overseas so the weighted average gas price received by the LNG plants wouldn't change much at all - somewhere around a 5% drop - but it would make a massive difference to Australian manufacturing and consumers.

But even Labor is showing no appetite for that so I guess we just preside over the final destruction of Australian manufacturing in exchange for a short-term sugar hit for the Qld government of LNG royalties. The only ready-to-go source of new gas fields other than Narrabri and the last dregs of Bass/Otway is probably the offshore NT but it would need a new pipeline from Alice Springs to Moomba, and the cost of getting it to NSW & Vic would be huge.

So that just leaves LNG import, paying full LNG prices, and we are left with the fallout of political failures that put us in the ridiculous situation where the East Coast will likely be both an exporter AND importer of LNG.

At least I'll be collecting some bumper WDS dividends in the meantime. Despite that dreadful reservation policy that would supposedly cripple the industry if it was applied on the East Coast!