Latest news with #gasshortage
The Guardian
02-07-2025
- Business
- The Guardian
An impending gas shortfall in eastern Australia? This is just gas market Groundhog Day
The Australian Competition and Consumer Commission is yet again warning of imminent gas shortfalls for Australia's east coast. In response, the federal government has announced another review into whether we need to reform our gas market regulation. Given the ACCC has been running a gas market inquiry since 2017 and has been saying pretty much the same thing every year since – essentially that gas producers treat Australian consumers like second class citizens – isn't the answer blindingly obvious? For the past few years, the gas market has been stuck in Groundhog Day. Each year the gas producers tell us that the only problem is slow government approvals for new developments. Interestingly governments have approved many new gas developments, for example Santos' Narrabri gas field was approved in 2020 but is yet to proceed. Yet each year we find ourselves in the predicament of imminent shortfalls. Then the government steps in to 'negotiate' (or is it beg?) for the gas producers to pretty please provide some extra gas to domestic consumers at a price that won't cripple them. In response the gas companies miraculously find some extra gas under the couch and dribble out a little bit more, but not too much that it might noticeably reduce prices. Some gas producers appear to be engaged in a phenomenon so well known to economists they've invented a term for it: 'strategic withholding'. This is where a producer knows that if they pull back a bit on production then they can force up prices enough that it will increase their overall long-term profits. So, the government can grant permission to exploit extra gas fields, but that doesn't mean a producer will give us extra gas if it will reduce prices. The Victorian government proposed that in order to assist manufacturers desperate for gas, it would free up gas supply for them by switching households away from gas appliances to electric-powered ones. This would not only assist manufacturers, it would also leave households financially better off. Independent analysis by the Institute of Energy Economics and Financial Analysis found it would save households $6.3bn on their energy bills over 10 years, compared with an extra cost of new appliances of $3.5bn. Not to mention it would substantially reduce carbon emissions. The counterattack from the oil and gas lobby was vociferous. The gas pipeline lobby has been threatening that they'd be massively hiking pipeline charges to make up for the loss of revenue from households. There have been claims that the forthcoming gas shortage was somehow the fault of the Victorian government for being 'anti-gas'. This went to the extent of Santos accusing the Victorian government of being akin to that of North Korea. You just had to ignore the fact that gas pipeline flow data clearly shows gas suppliers have been funnelling large quantities of Victorian gas northward for years. Meanwhile the net gas coming south from Queensland's gas exporters has been a tiny dribble. You also had to ignore the fact that under this 'anti-gas' government, gas producers have been free to pursue new Victorian gas supply investments in recent times involving hundreds of millions of dollars. In the face of attacks, the Victorian government pulled back from a phase-out of gas heaters. This would have been the greatest financial and gas supply benefit to consumers of any single energy policy currently in contemplation by Australian governments. Victorian residential gas heating is responsible for about 70 petajoules of gas consumption per annum which is 20% more gas than currently consumed by all of Victoria's manufacturing facilities and around two to four times the amount of gas used in power generation in Victoria. Another way of looking at it is that it would provide around the same amount of extra gas as former federal Liberal leader Peter Dutton had promised under his gas reservation policy. A policy which his colleagues had claimed would 'flood' the market with gas. Yes, a gas heater phase out would have overruled consumer choice. But how many households do you know that when confronted with a broken down heater in winter think through the gas market supply-demand balance over the next decade in deciding what to do? How many pull out a spreadsheet to evaluate the costs and benefits for them to switch over to electric compared to industrial manufacturers? Those who claim we must leave consumers to choose are the same types of people that gullibly believed oil and gas companies would put the interests of Australian consumers first over making money from LNG export plants. Tristan Edis is director of analysis and advisory at Green Energy Markets
Yahoo
02-07-2025
- Business
- Yahoo
Australia's Commodity Exports Face Headwinds
Australia has been out of luck lately. The country's consumer watchdog just this week warned the east coast could face a gas shortage as soon as this year. Smelters and miners are complaining about high energy costs and asking for government help. And now the industry department is warning that commodity exports are about to weaken on trade headwinds. In a new report, the Australian Department of Industry, Science and Resources said it expected commodity exports to keep rising over this year and next, but income from them is set to weaken—because of lower commodity prices. The trend would be an extension of the decline in commodity export profits from the 2024/25 fiscal year, the department said. By the numbers, the Department of Industry, Science and Resources expects A$2 billion ($1.3 billion) lower profits from commodity exports for fiscal 2024/25, falling further by A$4 billion ($2.6 billion) in the current fiscal year that begins today, and moving lower still, by A$8 billion ($5.3 billion), in fiscal 2026/27. It seems the Australian government expects a consistent oversupply situation in most of its export commodities, citing growth in supply. For instance, iron ore supply globally is set to keep growing over the next two years, leading to consistently soft prices, affecting Australia's export earnings. Iron ore accounts for as much as a quarter of the country's total resource and energy commodity exports, so an impact on iron ore profits is an impact on total profits. Indeed, the industry department sees iron ore export profits sliding from A$116 billion in 2024/25 to A$105 billion in the current fiscal year and further to A$97 billion in fiscal 2026/27. In U.S. dollars, the decline is from $75.6 billion to $69 billion in 2025/26, and to $63.7 billion in 2026/27. Interestingly, over the longer term, it could be Australia itself contributing to the price decline trend. A new iron ore deposit was recently discovered in Western Australia that holds an estimated 55 billion metric tons of the basic metal, valued at some $6 trillion. The outlook for liquefied natural gas is not much better than the one for iron ore. According to the industry department, while it prepares for weaker iron ore prices, Australia's commodity industry should brace for softer LNG prices as well. Again, the reason cited for the prediction is robust global supply. Most of that, according to analysts, is set to come from the United States but Canada just shipped its first LNG cargo from the Shell-led LNG Canada facility in British Columbia, so there will be non-U.S. supply growth as well, most likely. Related: Speaking of Shell, it is not even half as bothered about LNG demand, supply, and prices as the Australian government appears to be. In fact, Shell expects global LNG demand to rise by 60% by 2040, which should theoretically support reasonably healthy price levels for all producers. Coal, meanwhile, will remain a major contributor to Australia's energy commodity earnings, despite the government's determination to phase out hydrocarbons from the country's energy system. Yet profits from thermal coal exports, the sort used in electricity generation, are expected to follow the decline in iron ore and LNG. One big reason for this may be China's boost in domestic coal supply, which has reduced its demand for imported coal. Metallurgical coal exports, however, are seen remaining steady over the next two years, suggesting healthy demand from the metallurgical sector abroad. There are a couple of commodities that are enjoying stronger growth in demand than in supply, with profits from their exports set to rise substantially. One of them is gold, seen rising to the top third place among Australia's commodity export profit contributors. The other is copper—exports are seen surging by 25% this fiscal year. These metals, it seems, are going to remain in strong demand even as iron ore falters. By Irina Slav for More Top Reads From this article on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
RNZ News
23-06-2025
- Business
- RNZ News
Climate Minister says gas shortage will lower greenhouse emissions
Kapuni gas plant. Photo: RNZ / Robin Martin Climate Change Minister Simon Watts says the gas shortage will lower greenhouse gas emissions, but at a cost for businesses that can't switch to electricity. Supply from existing gas fields has plunged since the government published its Emissions Reduction Plan in December 2024. Watts was asked in a scrutiny hearing in front of the environment committee of MPs why the government's climate plan had put such heavy emphasis on capturing and storing carbon dioxide underground at Kapuni gas field, when the project was untested and its prospects were now looking dubious. Watts blamed the gas shortage - but said the shortage itself would lower carbon dioxide emissions. He said, compared with when the plan was written, "New Zealand has less gas than it thought". "Less gas that's available by virtue is less emissions, so in some ways there is an acceleration of the emissions reduction because we simply don't have that gas available," he said. "We are at critical levels in the context of low levels of gas. Some may say with a purely climate hat on, well that's good, there are no emissions and therefore they can't use it (gas)," Watts said. "But the reality is, in a manufacturing and industrial sense there are a number of businesses who either have an inability to transition to other sources ... or doing so is a significant fiscal cost and/or time horizon." Watts said the government was looking at ways to help those companies. "The good thing is, in the current environment there is an economic [and] commercial case to transition off gas because electricity is cheaper, and therefore the commercial imperative is driving that transition." "I'll take market intervention over government regulation any day." Watts said the government's assumptions regarding future gas use and the prospects of carbon capture at Kapuni would need to be reassessed and the results would published later this year. Carbon capture and storage (CCS) condenses carbon dioxide and stores it underground in reservoirs. Overseas, some high profile projects have been controversial because taxpayer funds for climate action were being paid to some of the planet's biggest emitters, fossil fuel companies, to capture and store just a tiny fraction of their pollution underground. Fully a third of the carbon savings needed to meet the government's legal obligations to cut emissions from 2025-2030 was supposed to come from carbon dioxide being stashed permanently underground at Taranaki's Kapuni gas field. But in May, Kapuni's owner Todd Energy told RNZ the project wasn't viable unless it received some kind of extra incentive or subsidy from the government. The scheme would earn carbon credits for every tonne of emissions stored, but Todd said the market price of carbon was too low to justify the investment. Simon Watts. Photo: RNZ / Samuel Rillstone At the scrutiny hearing, Watts was grilled by opposition MPs on whether Todd Energy had asked for direct subsidies from the government. Watts said he hadn't seen such a request, but Labour MP Deborah Russell presented him with an answer to a written question in Parliament, confirming Todd had asked for subsidies. Watts didn't directly answer Russell when she asked what the government's reply had been. He said in regards to support for industries "there's a number of aspects that remain under active consideration". Watts said the government was still committed to passing regulations allowing carbon capture and storage as "one tool in the toolbox" for lowering emissions. RNZ asked Todd to clarify what it had asked for. It said it had not asked the government for a direct subsidy for carbon capture and storage at Kapuni. But the company confirmed it wanted either co-investment, government underwriting or shared liability with the taxpayer for any future carbon leaks from the project. Todd has previously argued the government should treat carbon capture and storage facilities as infrastructure. "In our 2024 submission to MBIE (Ministry for Business Innovation and Employment) on the CCUS consultation, we did signal that government support - particularly in the form of risk-sharing or enabling mechanisms - would be essential for CCS to proceed in New Zealand," it said. "Particularly, we noted that New Zealand's declining gas reserves make the economics of CCS challenging and that 'for CCS to be effective, the government should consider sharing project risks and responsibilities. "It could be liability for leakage, particularly if the intent is to store third party CO2 in time. Due to challenging economics there is also financing risk that co-investment or a government underwrite could help to de-risk," said the company. Todd Energy had previously estimated the Kapuni field would have room for storing carbon dioxide produced by other companies, as well as its own. Earlier in the hearing, Watts was asked by National MP Grant McCallum about the risk of "emissions leakage" if New Zealand started lowering its methane emissions from farming. Emissions leakage refers to the risk of production moving overseas to get away from emissions pricing in its country of origin. Watts defended the necessity of meeting New Zealand's climate targets and international obligations. "You hear some on some corners saying, we're very small and insignificant," he said. "Every country, big or small, has a role to play in terms of reducing emissions and New Zealand is part of the Paris Agreement for that purpose. "In terms of adding up all the small and insignificant countries, it adds up to 40 per cent of global emissions," Watts said. "If we pull out, what signal does that send? There are three countries that are not part of the Paris Agreement, the USA and a number of other countries that most people probably have probably never heard of." [Those countries are Iran, Libya and Yemen . "Russia, China, India, they're all part of the Paris Agreement, and all the other countries we would look to - the only one is the US. "In regards to the implications on international trade, ... New Zealand has a reputation as a primary sector exporter of red meat, dairy and other products," he said. "Why would we put that at risk?"
Reuters
30-05-2025
- Business
- Reuters
Australia's Viva Energy gets green signal for proposed Geelong LNG terminal
May 30 (Reuters) - Viva Energy Group ( opens new tab said on Friday the Victorian government has cleared the construction of its liquefied natural gas (LNG) terminal project in Geelong, amid growing concerns over a potential gas shortage in Australia. The Australian government has been actively seeking gas supply commitments to help close the gap between supply and demand, following a warning from the country's competition regulator that the east coast may face a longer-term shortfall. "We believe the LNG terminal is vital to ensure the secure supply of gas to the south-east market," Chief Executive Scott Wyatt said. The fuel retailer said that the current timeline targets first gas delivery from the proposed project in time for the Victorian winter of 2028.
