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Australia's LNG exports face review amid crisis

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LNG Industry,

According to the latest Bloomberg report, Australia’s competition regulator has announced that the possible sale of natural gas intended for the country’s domestic market to overseas customers instead must be reviewed amid high wholesale prices at home.

The regulator announced that the ability of the Santos Limited-led Gladstone LNG project to export third-party gas must be examined. The US$18.5 billion project will buy more than 20% of gas available for users on the country’s east coast this year due to shortages from its own fields.

The supply squeeze has contributed to the spot price of wholesale gas in Australia tripling in the last two years, and led to calls to restrict exports to Asia. Royal Dutch Shell Plc, which operates the Queensland Curtis LNG export plant, said in March that the purchase of gas intended for the domestic market by the state’s LNG exporters had compounded the issue of gas shortages.

The most viable short-term source of boosting domestic supply is via the Queensland LNG projects, although challenges remain to get the gas from the northern state down to Victoria and South Australia. New low-cost supplies must be developed over the long-term.

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