Implications of LNG exposure on the competitiveness of Australia’s eastern gas market
Ross Lambie A , Nicole Thomas A and David Whitelaw ADepartment of Industry, Innovation and Science, Australian Government.
The APPEA Journal 56(2) 589-589 https://doi.org/10.1071/AJ15095
Published: 2016
Abstract
Australia’s eastern gas market has historically been one of low prices and stable, long-term contracts. The development of coal seam gas (CSG) and the construction of Queensland’s three CSG to LNG projects is driving a tripling of gas production in eastern Australia and changes to historical patterns and directions of gas flows throughout the market. This transition from an isolated market to one linked to international LNG markets, coinciding with the unwinding of many legacy contracts, is leading to unprecedented change and will have profound effects on all participants.
This extended abstract considers the implications of LNG exposure on the competitiveness of Australia’s eastern gas market. It will draw on the expertise of the gas market specialists in the Office of the Chief Economist, and the oligopolistic model of the market, to consider impacts on supply, demand, price, and the level of competition in various sectors of the market.
One of the initial findings is that the volatility of global LNG spot prices is likely to have a significant impact on both gas production and demand in east Australia, given the scale of LNG exports relative to the eastern market. The extended abstract explores a range of LNG demand scenarios for the eastern gas market. It will emphasise the fundamental importance of expanded gas production on market outcomes, and the need for ongoing gas exploration and development to support the market through the transition.
Ross Lambie is General Manager of the Resources and Energy Economics Branch in the Department of Industry, Innovation and Science. Prior to this, he was Manager Gas Markets, a position he held since joining the Bureau of Resources and Energy Economics in 2013. His career began as a trader and manager in the New Zealand financial markets, which spanned 10 years mostly with Westpac Banking Corporation. Ross also spent five years self-employed, trading equities and futures. Before joining the Department in 2013, he spent two years as Manager of the Economics Team for the ACT Independent Competition and Regulatory Commission. Ross holds bachelor degrees in accounting and resource studies, an Honours degree in economics and a master’s degree in commerce and management (Distinction). He has a PhD in public policy and economics from the Australian National University. |
Nicole Thomas is the Manager of the Energy Markets Team in the Resources and Energy Economics Branch of the Department of Industry, Innovation and Science. Nicole was previously the Counsellor, Resources and Energy, at the Australian High Commission in India, responsible for collaboration with the Indian Government and industry in the energy and resources sectors. Prior to taking up her position in New Delhi, Nicole managed the offshore petroleum exploration section at the Department of Resources, Energy and Tourism, with previous roles in the Department responsible for carbon capture and storage policy, and mine safety. Nicole has also worked for Australia’s Treasury and the Department of Finance and Administration. Nicole holds a Bachelor of Arts/Bachelor of Science, a Graduate Diploma in Applied Economics, and is presently undertaking a Master of Environment and Resource Economics at the Australian National University. |
David Whitelaw has been with the Economic and Analytical Services Division for more than two years, where he is employed as a Gas Economist. He has a long history of working in the gas industry, commencing in the forecasting and modelling section of the Gas & Fuel Corporation of Victoria, and later moving to GasNet Australia after the privatisation of the Corporation. At GasNet David held a number of positions including Regulatory Manager, a role where he managed two access arrangement submissions to the economic regulator. Before taking up his present position he has consulted to the Australian Energy Market Operator. David has a PhD in physics from LaTrobe University. |
References
AEMO, 2015—National gas forecasting report. December 2015. Melbourne: Australian Energy Market Operator.Department of Industry, Innovation and Science, 2016—Gas Market Report 2015. Canberra: Australian Government.
