Changes anticipated for Australia's gas market11 July...

Changes anticipated for Australia's gas market

11 July 2012

Australian gas markets are expected to undergo significant change over the short and long term, particularly in eastern Australia via a rapid increase in LNG exports from the middle of this decade according to the BREE Gas Market Report that was released today.

Over the next five years, Australia's wholesale gas prices could increase substantially as prices converge towards international prices once LNG exports from Gladstone commence around the middle of this decade and also from higher production costs.

"Higher gas prices in Eastern Australia should support investment in gas supply and, ultimately result in an increase in gas production, which in turn would put downward pressure on gas prices," said Professor Quentin Grafton, BREE's Executive Director and Chief Economist.

International gas markets are also expected to experience change via strong increases in consumption, the application of new technology and changes to pricing and trade patterns.

"Gas will increasingly become the fuel of choice in many developing economies due to its low carbon emissions relative to other fossil fuels and because of its versatility as a fuel that can be used in electricity power generation and for direct heating," Professor Grafton said.

BREE expects global gas consumption and trade to increase over the next two decades, largely in non-OECD economies, underpinned by strong economic growth and diversification of electricity generation away from coal to gas.

Australia is expected to play an important role as a world class LNG exporter with exports increasing from around 20 million tonnes currently to over 63 million tonnes in 2016-17 and continuing to increase until the end of this decade.

"Australia is well positioned to take advantage of increased global LNG trade with three projects in operation and seven projects under construction. This will provide large economic benefits to Australia," Professor Grafton said.

For free downloads of the Gas Market Report, please visit the BREE website www.bree.gov.au.

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