shift in gas prices to oil linked

From City:
Australia Oil & Gas: Paradigm Shift In Gas Prices: Moving To Oil-Linked
There is mounting evidence of domestic gas prices moving to oil-linked. Santos and Beach Energy offer leverage to such an outcome. We rate Santos Overweight with PT of A$16.50. Beach is upgraded to Overweight with revised PT of A$1.40. This is a paradigm shift away from 30 years of CPI-linked price structures. Australia was once ?long gas? and producers were hostage to a small local market. An extended period of low prices, a run-down in conventional production and reserves and growth in LNG projects are re-shaping market dynamics. A move from CPI price to oil linked would take domestic gas prices from the current average +/-A$4/GJ to A$7/GJ or more in real terms. Australia?s progress toward becoming the world?s largest LNG exporter has acted as a magnet for global oil & gas companies. LNG focused super-major oil companies have consolidated resource ownership and account for 80% of all eastern Australian operations. When the mega-projects at Gladstone are up and running mid-decade, total LNG export revenue would approximate A$28bn pa and dwarfs the A$3bn domestic gas market. Volumes required to serve the LNG market will strain the supply side and we forecast domestic market shortfalls after 2015. Higher domestic prices are inevitable to stimulate supply which we think can only get met from higher cost tight gas and shale gas. Higher gas prices open up the path to higher reserves from unconventional fields. US and Canadian companies experienced in US shale gas and Australian companies too, are driving a mini-boom in drilling, testing and land acquisition.