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Australia watchdog takes aim at LNG exporters

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LNG Industry,

According to Reuters, the comments by Australian Competition and Consumer Commission Chairman Rod Sims hint at what the watchdog may recommend to the government, which is due to decide by 1 November whether to limit LNG exports, based on reports from the commission and the Australian Energy Market Operator.

“The gas supply outlook in 2018 now appears worse than at the time of our first gas report in March 2016,” Sims said in a speech in Canberra.

Recent deals announced by companies like Origin Energy, co-owner of the Australia Pacific LNG plant, and Santos Ltd, operator of the Gladstone LNG project (GLNG), to boost local gas supply had done little to help the market, he added.

“I said six months ago... if I were providing private advice to the LNG producers I would say they would be well advised to support the domestic market as much as possible at this crucial time. They have largely not done so.”

GLNG, co-owned by Santos, France’s Total SA, Malaysia’s Petronas and Korea Gas Corp, is considered most likely to face export curbs as it is taking gas from the local market to help fill its export contracts.

Sims said Santos had taken some highly visible steps to boost east coast supply, “but none of these moves have made any serious inroads into the gas supply problem.”

He said it was puzzling that LNG exporters were selling uncontracted volumes on the spot market offshore rather than into the higher priced domestic market, especially at a time when local businesses and households are up in arms over soaring gas prices.

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