New Sydney and Adelaide gas markets—what it means for producers*

Abstract

The introduction of the short term trading market (STTM) as the mechanism for supply of gas to both the Sydney and Adelaide markets presents a fundamental shift in the manner in which gas is provided to these markets, directionally leading to a more liquid market and increased efficiency of supply infrastructure, including potential implications for gas producers into the future. Traditionally, Sydney and Adelaide have been supplied with gas made available under long term contracts between retailers, producers and providers of gas pipeline infrastructure. The STTM has attempted to recognise the contribution and legal standing of these foundation arrangements while providing means by which an increased range of parties may offer gas directly to the market by removing the need for long term arrangements with a downstream counterparty. The ability to sell gas into these markets without having a defined downstream buyer potentially provides an additional route to market for producers. The STTM will begin operation on 4 June 2010, preceded by a trial period beginning in March 2010. This presentation will provide a description of the new market, any additional obligations for producers and, finally, an overview of opportunities the new market may provide.