AUSTRALIAN NATURAL GAS PRICES — WELLHEAD TO CONSUMER

Abstract

Natural gas prices to producers in all states of Australia, except Victoria, have moved closer together during the 1980s as the industry has matured. Where significant differences exist in city gate prices, they are caused by wide- ranging transmission tariffs related directly to the initial cost and the length and the volume carried in the respective pipelines.

Gas utilities in some states had a great influence on the natural gas pricing structure to consumers during the 1970s, when alternative fuel oil prices rose dramatically and long- term, low- price gas purchase contracts were in place. State governments have moved during the 1980s, however, to replace the utilities as the greatest influence in the pricing chain from wellhead to consumer.

With the notable exception of Victoria, producers in most states in recent years have gained a fairer, higher proportion of the end- consumer price. Gas markets to a major degree are now committed Australia wide.

Confidentiality and complex pricing philosophies make it sometimes difficult to see clearly the wellhead to consumer pricing structure. However, available information can be analysed and compared to deduce the national scenario with fair accuracy. The wide range of prices to consumers reflects the fact that major industrial customers underpin the development economics of high- cost long- distance transmission lines.

The abundance of gas in Australia, both onshore and offshore, makes new uses essential to optimise the industry's potential.