"At best it will eliminate gas price spikes: analysts
Forecasting prices is fraught at the best of time, but the best guess from analysts after the supply deal is that wholesale gas prices will bump along in a band of $7-to-$10 per gigajoule (GJ)."
So what is a fair price?
"Undoubtedly, the big industrial consumers played a shrewd game in boycotting deals with the gas suppliers in the expectation the Government would bring in some sort of price control.
In the aftermath of the deal, they are unlikely to be offered anything like the $16/GJ contracts that were being hawked around six-to-twelve months ago.
The ACCC point of view is there is an "appropriate benchmark price" of $5.87/GJ in Queensland and $8.17/GJ in Melbourne based on current Asian LNG spot prices.
Mind the gap !
"While any short-term gap in the eastern states' market appears to have been plugged, the big problem remains much faster than expected decline in gas supplies in southern Australia, particularly Victoria.
In fact, perhaps the most striking news in AEMO and ACCC reports was the sudden decline in Bass Strait production from 330PJ this year to 244PJ in 2018".
Have been watching this one for a long time...
But there is perhaps a bigger problem looming and that is the domestic gas price is still linked to global energy markets.
Oil prices have been edging up recently and are now back near two-year highs — not only because inventories are falling, but also demand for energy is picking up.
China is leading that demand. It is also desperately seeking to wean itself off the choking impact of burning coal for power.
Currently around 60 per cent of Chinese power comes from coal and 4 per cent from LNG.
Those figures only need to change a few points to see the Asian LNG price the ACCC used in its benchmarking exercise take off again.
And if that happens, the PM will probably have to leave his Australian Domestic Gas Security Mechanism in its holster. It would only be shooting blanks.
Comments....
I see the whole situation is highly volatile and probably levelling out at parity with international markets.
Actual numbers are starting to emerge now (My recent Posts) and I take the view that everyone in CTP from the BOD to shareholders needs to have our COP, haulage cost and market prices in the back of their heads.
We can not afford to make any mistakes in the execution of the 4 well appraisal program, financing and constriction of surface facilities and the risk free monetisation of CTP's initial objective of filling the NGP.
Best Regards
OGP
CTP Price at posting:
9.7¢ Sentiment: None Disclosure: Held
