Essays by Eric Worrall
Gas companies appear to be hinting that they may stop exploration and drilling in Australia, unless the government stops imposing price controls.
East Coast Gas Supply Pact is at risk of price controls
Via Nick Toscano
update December 12, 2022 — 4:23 pmGlobal energy group Shell has suspended its role in a landmark gas supply deal designed to stem a shortage on the east coast next year as it assesses the plan’s impact. The Albanese government’s plan to limit fossil fuel prices.
Three Queensland LNG exporters – Shell’s joint venture QCLNG, Origin Energy-backed APLNG and Santos’ GLNG – will hold talks this week to determine whether September agreement to supply 157 petajoules gas – which accounts for about 25% of the east coast’s annual demand – could continue after the government announced a series of interventions in energy markets.
The government last week announced a series of initiatives designed to reduce skyrocketing electricity bills. These include temporary price limits of $12 a gigajoule for wholesale gas without contract and $125 a ton for coal, and powers to affect the price of gas contracts beyond next year. . The proposals have sparked a backlash from gas producers, and analysts have described the initiatives as a “declaration of war” on the industry.
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If the deal fails, Resources Minister Madeleine King could be forced to step in and trigger the Australian Gas Security Mechanism for the first time – a policy that forces producers to withhold certain quantities just to domestic sale – to avoid shortage or loss of fuel.
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Shortages and price increases could be resolved very quickly if the Australian Government restores confidence by freeing up the energy market. But this would require politicians to give up their Net Zero fantasies and admit that they were wrong. So I don’t see that happening any time soon.
Instead, Australian politicians seem keen to punish fossil fuel companies for keeping the lights on.
Energy companies are facing not only price controls. A few days ago, the The Queensland Land Court has made history by citing climate change as one of the reasons it recommended denying a coal mining license. — a decision that has shaken Australia’s fossil fuel industry.
Fossil fuel companies don’t have to put up with this abuse. Why should they accept price ceilings, forced price control quotas and regulatory hostility in Australia, when they can move billions of dollars of investment there Promising new gas field stretching from Ghana to DRC? Why should they deal with an Australian political class that hates them, when they can deal with African governments hungry for investment and jobs?
Money has been poured into projects like East African crude oil pipelinealong with existing projects such as activities West African gas pipeline, so multinational energy companies have become deeply involved in Africa’s energy projects. Any additional provocations could be their last chance to convince them to withdraw their troops completely from Australia.
Australian politicians are about to receive an expensive lesson about who is really responsible for Australia’s energy supply. Fossil fuel companies don’t need Australia, but Australia needs fossil fuel companies.
Ordinary Australians will pay the price for the incompetence and arrogance of our leaders.
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