FACT CHECK: Australians still pay less for Australian gas than Asian LNG buyers

Notwithstanding extensive evidence to the contrary, gas buyers still claim that Australians pay more for gas than do the overseas buyers of our LNG. This remains false. EnergyQuest tracks the landed price of Australian LNG in our four major markets, Japan, China, Korea and Taiwan. These are landed prices, prior to the cost of regasification, pipeline transport and profit margins in the importing country.

According to government customs data from these four countries the average price of Australian LNG landed in North Asia in November 2020 was US$5.85/MMBtu (A$7.49/GJ) in China, US$5.91/MMBtu (A$7.57/GJ) in Taiwan, US$6.11/MMBtu (A$7.82/GJ) in Korea and US$6.59/MMBtu (A$8.44/GJ) in Japan. These prices are prior to regasification, transport of the gas in the import market and profit margins. For industrial buyers in those countries, the additional costs are likely to add at least 20% and significantly more in China. According to Platts LNG Daily (14 January) trucked LNG prices in northern China had surged to around US$28/MMBtu around Beijing, Tianjin and Hebei.

The paucity of accurate, timely public data for east coast wholesale gas prices makes it difficult to find clear domestic benchmarks to compare with LNG prices. The latest ACCC Gas Report from July 2020 only has gas price data from late 2019 to early 2020 i.e over a year old. However we know that in November short-term east coast domestic gas prices averaged A$5.88/GJ at Wallumbilla, A$5.51/GJ in Victoria, A$6.07 in Adelaide, A$6.18/GJ in Sydney and A$6.25/GJ in Brisbane. These prices include pipeline transport and are below prices paid for Australian LNG. Santos discloses the average prices received for LNG and for domestic gas. In Q4 it averaged US$5.34/MMBtu (A$6.89/GJ) for LNG. This is consistent with the customs data quoted above, taking account of shipping costs. For domestic gas it averaged US$3.97/GJ (A$5.42/GJ) also significantly below LNG prices.

EnergyQuest continues to advocate for better Australian data on wholesale gas prices. New Zealand publishes quarterly statistics of average wholesale gas prices and average prices for industry. Australia does not. Given the concern about gas prices and the degree of misinformation it is not clear why Australia still has such poor data. The Australian Bureau of Statistics has the necessary data on average producer prices on both the east and west coasts but only publishes it as an index, something that is interesting but not as useful as the absolute numbers. Another improvement would be for the ACCC or AER to survey and publish average wholesale and industrial gas prices on a monthly basis (instead of every six months with up to a year in arrears). This would be useful for both gas sellers and buyers.

For regular updates on Asian prices see our Australian LNG Monthly Report: https://www.energyquest.com.au/monthly-lng-report/