An uneasy truce: a post-intervention gas market in Eastern Australia
Kaushal Ramesh A * , Krishan Pal Birda B and David Dixon AA
B
Kaushal Ramesh is Vice President of LNG and Head of Rystad Energy’s Gas and LNG Analytics and manages their published LNG research, focussing on LNG trading, shipping, and investments. His past advisory work includes project economics, regulatory impact studies, market entry strategies and LNG contract negotiations. Prior to joining Rystad Energy, Kaushal worked multiple roles at ExxonMobil, managing commercial operations of refined products and LNG, and gas and power sales contracts in the Asia-Pacific, as well as advising spot cargo trades, LNG contracting, and investment decisions as a market analyst. |
Krishan Pal Birda is a Senior Analyst who leads Rystad Energy’s Australasia Upstream Research & Analysis team. In addition to monitoring regional activity in Australasia and among E&P companies, he oversees the Australasia Solutions product. His other responsibilities include publishing frequent analyses, product development, and assisting clients on expert matters. Krishan specialises in the Australian gas & LNG markets as well as coal seam gas modelling. He has been employed with Rystad Energy for over 5 years and has a background in Civil Engineering. |
David Dixon is a Vice President in the power and renewables team at Rystad Energy. David’s area of focus is the utility scale solar, wind and storage market in Australia. David has an undergraduate degree in Petroleum Engineering (University of Adelaide) and a Master’s of Photovoltaic Engineering (University of New South Wales). David has 6 years of experience in the upstream oil and gas industry and 5 years in the renewables sector. |
Abstract
We present our analysis of the East Coast fundamentals and our long-term gas price assumptions through 2033 in Wallumbilla and the southern states. The paper concludes that the market has a chance to return from the brink of dysfunction. The replacement of lower-cost legacy supply near demand centres with higher-cost coal seam gas (CSG) from a remote region in another state through limited infrastructure – or liquefied natural gas (LNG) imports – fundamentally signals higher prices even as domestic demand declines from 520 PJ in 2023 to 425 PJ in 2033 with possible intermittent increases during coal retirements. Added to the mix is long-term demand and policy uncertainty, the current era of monetary tightening and vanishing finance for fossil fuel projects. The relationship between East Coast gas producers in Australia and the federal government appears to have de-escalated following the inclusion of potential price cap exemptions in the recently released mandatory code of conduct for the domestic wholesale gas market. Gas remains a crucial long-term input in the manufacturing sector and will continue to support gas intensive industries if price alignment can be achieved, which is what will be needed to ensure the gas sector’s longevity in the energy transition. We also discuss the role of gas in the National Electricity Market which is headed for an increasingly chaotic coal exit, keeping gas extremely relevant to support system resilience.
Keywords: Australia, east coast, electricity, gas, imports, industry, LNG, market, prices.
Kaushal Ramesh is Vice President of LNG and Head of Rystad Energy’s Gas and LNG Analytics and manages their published LNG research, focussing on LNG trading, shipping, and investments. His past advisory work includes project economics, regulatory impact studies, market entry strategies and LNG contract negotiations. Prior to joining Rystad Energy, Kaushal worked multiple roles at ExxonMobil, managing commercial operations of refined products and LNG, and gas and power sales contracts in the Asia-Pacific, as well as advising spot cargo trades, LNG contracting, and investment decisions as a market analyst. |
Krishan Pal Birda is a Senior Analyst who leads Rystad Energy’s Australasia Upstream Research & Analysis team. In addition to monitoring regional activity in Australasia and among E&P companies, he oversees the Australasia Solutions product. His other responsibilities include publishing frequent analyses, product development, and assisting clients on expert matters. Krishan specialises in the Australian gas & LNG markets as well as coal seam gas modelling. He has been employed with Rystad Energy for over 5 years and has a background in Civil Engineering. |
David Dixon is a Vice President in the power and renewables team at Rystad Energy. David’s area of focus is the utility scale solar, wind and storage market in Australia. David has an undergraduate degree in Petroleum Engineering (University of Adelaide) and a Master’s of Photovoltaic Engineering (University of New South Wales). David has 6 years of experience in the upstream oil and gas industry and 5 years in the renewables sector. |
References
AEMO (2023a) Gas Statement of Opportunities. Available at https://aemo.com.au/-/media/files/gas/national_planning_and_forecasting/gsoo/2023/2023-gas-statement-of-opportunities.pdf?la=en
AEMO (2023b) OpenNEM. Available at https://opennem.org.au/energy/qld1/?range=1y&interval=1M&view=discrete-time
Kelsall (2023) Premier eyes hydrogen fix for home gas connections. Available at https://www.indaily.com.au/news/2023/07/31/premier-eyes-hydrogen-fix-for-home-gas-connections
McCubbing (2023) Victoria bans new homes from connecting to gas. Available at https://www.afr.com/companies/energy/victoria-bans-new-homes-from-connecting-to-gas-20230728-p5dryz
Northern Territory Government (2017) Roadmap to Renewables: Fifty per cent by 2030. Available at https://territoryrenewableenergy.nt.gov.au/__data/assets/pdf_file/0010/1056781/roadmap-to-renewables-report.pdf
