Hoping for good weather
The ACCC latest ‘interim’ report landed 30 June 2023 and the key findings were:
- In a concerning sign of the health of Australia’s electricity market, the supply/demand balance for gas depends significantly on reduced gas-fired power generation (GPG) demand and having good weather.
- East coast gas supply should be enough to meet overall demand in 2024, and in fact could be enough to produce a surplus of 90 PJ.
- Southern states will be in shortfall and continue to rely on Queensland gas. There should be enough storage and transport capacity, but the pipelines are getting full.
- There are much fewer gas supply contracts being offered.
- Most supply offers being made for 2024 aren’t subject to the $12/GJ cap and are slightly above it – adding weight to the observation that $12/GJ has become a new floor rather than a cap, especially when retail offers around $20/GJ are considered.
Mandatory Gas Code of Conduct
- The final version of the Australian Government’s Mandatory Gas Code of Conduct was released on 10 July 2023.
- The Code has expanded in length by about 50% since the consultation draft, continues to place more obligations on gas suppliers than buyers and, as expected, extends the $12/GJ price cap until 2025. A review of the cap is set to commence by 1 July 2025 which will be after the next federal election.
- There are more exemptions in the final version of the Code, the Minister for Resources has more latitude to grant exemptions in her own right, and the exemptions granted now can’t be revoked on a whim. Short term supply and supply from smaller producers is automatically exempt and a new explicit exemption for LNG imports has been added.
- EnergyQuest will cover the impact of the cap in detail in our upcoming East Coast Gas Outlook 2023.
Full financial year figure
- Based on EnergyQuest data (which is updated when official ABS data is released) for the financial year 2023/22, Australia earnt A$92.35 billion on the back of 81.9 Mt of LNG exports. This was a 31% increase compared to revenue of A$70.6 billion on exports of 82.5 Mt for financial year 2022/21, and more than triple the revenue ofA$30.5 billion on exports of 77.2 Mt for financial year 2021/19.
Some of the statistical highlights in this report are:
- Australian LNG projects shipped 6.59 Mt in June (95 cargoes), down on 6.82 Mt (99 cargoes) in May. The projects shipped an average 3.2 cargoes per day, the same as the 3.2 per day average in May.
- EnergyQuest estimates that Australian LNG export revenue in June was $5.4 billion, lower than the $5.8 billion in May, down by 24% on June 2022.
- Queensland exported gas to the other states in June, with daily net flows to southern states throughout the month.
- June gas-fired power generation decreased in all States except Tasmania where it was steady month on month. Gas’s overall share of the market decreased to 5.4% from 10.9% a year earlier.
Information about the EnergyQuest Australian LNG Monthly is available by clicking here.