Long-term gas prices being asked for are said to be about $7 a gigajoule, which is double current spot prices and is roughly the price that a supplier would get for export gas once the cost of freezing and compressing it into LNG for shipment was removed.
The review said LNG proponents were focused on building gas reserves so they could add to already approved production trains, which would improve the economics of their projects.
"This provides strong incentives not to sell incremental domestic gas contracts, which would require reserves dedication, until sufficient reserves have been appraised for the LNG projects," the review said. "Non (LNG) proponent gas producers may also be disinclined to enter new domestic contracts for a period of time, until they can determine whether they will be able to sell some gas for export or until the domestic price response to exports becomes clearer."
While the above prices are being offered by the exporters, it is believed AGL Energy, which remains focused on domestic markets, is prepared to sign long-term contracts at higher than current prices -- but not double them.
BOW Price at posting:
$1.55 Sentiment: Buy Disclosure: Held
