CANBERRA: Australia’s competition regulator said the possible sale of natural gas intended for the country’s domestic market to overseas customers instead must be reviewed amid high wholesale prices at home. Ahead of a meeting Wednesday between Prime Minister Malcolm Turnbull and energy producers over Australia’s potential gas shortages, the regulator said the ability of the Santos Ltd.-led Gladstone LNG project to export third-party gas must be examined. The $18.5 billion project will buy more than 20 percent of gas available for users on the country’s east coast this year due to shortages from its own fields, according to consultancy Wood Mackenzie Ltd. GLNG “was clearly short of gas and has had to buy it from the domestic market to meet its overseas contracts,” Rod Sims, chairman of the Australian Competition & Consumer Commission said in an interview. The purchases by Santos, along with state bans on drilling, “has created a crisis for Australian manufacturing, which does need to be addressed.”
The supply squeeze has contributed to the spot price of wholesale gas in Australia tripling in the last two years, according to a February report from the Australian Industry Group, and led to calls to restrict exports to Asia. Royal Dutch Shell Plc, which operates the Queensland Curtis LNG export plant, said in March that the purchase of gas intended for the domestic market by the state’s LNG exporters had compounded the issue of gas shortages. It didn’t name any specific companies. “It is not acceptable for Australia to be shortly the world’s largest exporter of LNG and yet to have a gas shortage on the east coast in its domestic market,” Turnbull said at a briefing Tuesday. “We will defend the energy security of Australians and reliable and affordable gas supply is a key part of that.”
