December 02, 2019 [Mash Viral] – The US oil and gas group said it’s committed to customers assessing their interest in engaging in a long-term supply in order to support significant investment in the new proposed terminal, but clients were not willing to make long-term commitments.
Gas prices of $ 10 and up is really the “death zone” for many manufacturers.
Andrew Richards, CEO of the Energy Users Association
“The interest of potential customers was insufficient,” said a spokesman for the company.
“At this point, we have not received enough market interest to advance an LNG import project, however, we will continue to evaluate the market and work with customers to respond.” to their supply needs. ”
Potential customers have been dissuaded from signing long-term contracts with ExxonMobil because of the federal government’s ability to restrict gas exports, which could lead to lower prices.
The Australian domestic gas safety mechanism, introduced by the Turnbull government in 2017, could force gas exporters to reorient their supplies to the domestic market in the event of a shortfall in the following year. It has not been triggered yet.
Graeme Bethune, EnergyQuest’s energy consulting firm, said energy consumers were signing short-term supply contracts because of the great uncertainty “that weighs on the market”.
“You have particularly suspended your industrial customers, in the hope that a miracle solution will be delivered to them,” he said.
“Customers have only been in business for a relatively short period of time – the average term seems to be two or three years instead of ten years – because of uncertainty about the direction of prices and the federal government could do or not do ”
Representatives of major energy consumers, including manufacturers, said the industry is increasingly worried about impending supply shortages. According to the national energy market operator, gas demand is expected to outstrip supply in South and Southeast Australia from 2023.
“As heavy gas consumers, we are very concerned that in the next three to five years there will not be enough for everyone,” said Andrew Richards, General Manager of the Energy Users Association. of Australia.
“We certainly need to see more gas enter the southern states, whether through more import terminals or additional gas pipelines transporting gas from Queensland and the Northern Territory.”
Richards said some manufacturers with high gasoline prices were reluctant to enter into 10-year gas deals because they did not know if they could stay in activity as long.
“Do they enter into this long-term agreement if they only have three or five years left?” Some manufacturers simply do not know, “he said.
“Gas prices of $ 10 and up are really the” death zone “for many manufacturers.”
Chemicals giant Dow announced the closure of its Altona plant in Melbourne in May, citing the high price of gasoline as a determining factor. RemaPak, a Sydney-based company, collapsed in administration in January, claiming that its gas costs had risen from $ 4 to $ 16 per gigajoule.
Other potential LNG terminals include the floating terminal proposed by AGL at Crib Point, Victoria, for which approvals are required, as well as a terminal in Port Kembla, New South Wales. South, by a consortium backed by Andrew & # 39; Twiggy & # 39; Energy Squadron and by Japan, JERA.
According to EnergyQuest’s analysis, the development of two gas import terminals will be critical to meet the anticipated demand, with the ports of Port Kembla and Crib Point being the most likely to function. LGA projects have faced strong political and political opposition, including from Federal Liberal MP Greg Hunt.
“According to our numbers, we think that it is definitely necessary to create two projects,” Dr. Bethune said.
The Australian Petroleum Production and Exploration Association has stated that it continues to oppose the “unnecessary and unscientific” ban on conventional gas exploration in Victoria, Victoria, which is expected to be re-examined next year.
“The fact remains that the gas closest to the market will still be the cheapest gas to deliver,” said APECA CEO Andrew McConville. ”
“We urge the [Victorian] government to let the restrictions expire.”
The import terminal proposed by ExxonMobil would likely have been located with its gas plant in Longford.
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