Gas Market in Crisis

As reported by The Australian Financial Review, Matthew Stevens:
The Australian gas market is fulfilling the competition regulator’s “worst fears” as both producers and customers struggle to cope with the new realities forced by the $70 billion investment in the transformation of the east coast industry from marginal domestic supplier to globally significant energy exporter.

“The outlook for gas supply is now even worse than it was a year ago; indeed, our worst fears are being realised,” the Australian Competition and Consumer Commission chairman, Rod Sims, will tell a gas industry conference in Sydney on Tuesday morning.

Sims, who arguably commands the broadest and most complete data base on the state of national gas markets following last year’s profoundly important ACCC study into east coast gas markets, will arrive at the 5th Annual Australian Domestic Gas Outlook conference with a set of clarifying and very timely observations.

The ACCC chairman will remind everyone that Australia has gas resources enough to fully sate domestic and export demands, but that producers have been unable to respond as they normally would to dramatically higher prices because of infrastructure and resource access constraints.

Sims will recommend, once again, that governments federal and state should avoid the temptation to reserve gas or force anything but the most pointed constraint on the Gladstone gas chillers that have destabilised the demand-side of the east coast equation. This potential, quite amazingly, is said to sit as an option that will be discussed on Wednesday at the meeting between the Prime Minister, Malcolm Turnbull, and the collection of big gas executives that he seems to believe hold in their ken the solution to our dawning gas crisis.

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