From the AFR last night:
East coast manufacturers say NSW Labor's promise to block Santos's $3 billion Narrabri gas project will dash any hope of gas prices falling and drive industry and jobs out of the state as fresh evidence emerged that some prices have surged more than 40 per cent in 12 months.Steve Bell, chief executive of basic chemicals maker Qenos, said he was "flabbergasted" at NSW Opposition leader Michael Daley's pre-election pledge that a Labor government would block the project, which could supply gas to manufacturing plants supporting thousands of jobs at prices Santos chief executive Kevin Gallagher promised on Monday would be "very competitive"."This should not be subject to a political process," Mr Bell said, echoing Mr Gallagher's call last week to keep politics out of the independent decision process for approval of Narrabri, which is due to go before the Independent Planning Commission.The Australian Workers' Union has also attacked Mr Daley's populist stance ahead of the March 23 poll. The Labor leader has pledged to kill off Narrabri due to water quality risks, which AWU National Secretary Daniel Walton described as "disappointing to say the very least" given scientific findings that with proper oversight it can be safely extracted.'More gas in the market is better'Mr Bell's comments reflect widespread consternation throughout NSW's manufacturing sector about any political move to thwart the development of much-needed gas, the price of which has soared in the past few years, putting jobs and investment at risk.AdvertisementWestern Sydney-based polystyrene cup manufacturer RemaPak brought in administrators in January after a hike in gas costs. Now the fate of a proposed $800 million ammonium nitrate plant that would create 700 construction jobs rests on the decision on the Narrabri project, which would supply the plant with gas for 20 years. "Anything that stops gas exploration or more gas coming into the market is a negative in my eyes," said Chris Schneider, managing director of National Ceramic Industries Australia. The country's only ceramic tile manufacturer has seen its gas costs triple in the last five years, stalling work on an expansion."More gas in the market is better for our business and for other gas users in the short and long term."The comments come as data emerged showing gas prices have continued to escalate on the east coast, despite efforts by the federal government to persuade Queensland's LNG exporters to make more gas available locally.Short-term gas prices on the east coast averaged $10.01 a gigajoule in the December quarter, some 42.5 per cent higher than a year earlier, consultancy EnergyQuest said on Monday. In stark contrast, domestic gas prices in Western Australia averaged $3.53/GJ, below even in the US Henry Hub benchmark of $4.95.Mr Bell and Mr Schneider said that the federal government's moves to secure east coast supplies haven't helped reduce prices. Chemistry Australia chief executive Samantha Read agreed and will use a gas conference in Sydney on Tuesday to call for swift action to put in place a national strategy that prioritises affordable gas for consumers."It is clear that despite government intervention to increase gas supplies to domestic customers, Australia's gas market is still not delivering outcomes that are in the long-term interests of consumers," Chemistry Australia said.'They are just playing politics'EnergyQuest has warned of a worsening of the shortage of gas plaguing the east coast as gas production falls from the Bass Strait, and Queensland coal seam gas resources underperform. Total reserves of gas on the east coast fell 8 per cent after production to 3617 petajoules in February, compared with December 2017, it found.Roger Fletcher, who owns one of the country's biggest meat processors Fletcher International Exports, called for "common sense" to prevail and for decisions around the development of the Narrabri project to be based on science."They are just playing politics with it," Mr Fletcher said. "But by not using that gas we do put more pressure on our energy. If the science is done it would be a huge cost saving for New South Wales and it would bring more businesses to NSW."Opponents of the project are sceptical about claims that the development of Narrabri coal seam gas would benefit the local economy, and specifically about the initial gas deal announced with Perdaman Group for the potential ammonium nitrate project, which was not released to the Australian Securities Exchange."This appears to be an attempt by Santos to exaggerate the economic benefits of its planned destructive Narrabri CSG project," said Lock the Gate Alliance spokeswoman Georgina Woods, pointing to "widespread and sustained opposition" to the project across the region.But Mr Gallagher on Monday reiterated that customers across regional NSW and in Sydney are "lining up for Narrabri natural gas"."Some customers are very interested in the industrial hub the Narrabri Shire Council is keen to establish, as it will be close to the gas supply, where gas is cheapest," he said."Narrabri gas will be priced very competitively on commercial terms, with development benefiting from Santos' position as Australia's lowest cost onshore gas developer." Qenos' Mr Bell said he was particularly disappointed with Mr Daley's promise given the Opposition Leader's Maroubra electorate covers Botany, where the company's plant is located and where a lot of employees live.He said proposed LNG imports wouldn't be of any use to industrial manufacturers such as Qenos because prices wouldn't be competitive.
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