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East Australia secures extra domestic gas to 2030

  • Market: Natural gas
  • 27/11/23

Australia's federal government has secured up to 300PJ (8bn m³) of extra gas supplies for the country's east coast market to 2030, helping offset a predicted domestic shortfall.

The two enforceable commitments for supply agreed with Australian gas producer Senex Energy and the 9mn t/yr Australia Pacific LNG (APLNG) project totals around two years of east coast industrial use, the federal government said on 27 November.

About 140PJ will arrive before 2027, with both companies granted ministerial exemptions from the price cap under Australia's gas code of conduct, giving "regulatory certainty over their investment and development plans and the additional supply helping to keep a lid on prices" according to the government.

The 300PJ adds to the indicative domestic supply commitments of 260PJ to 2027 made prior to the code's release in July, with the government anticipating further applications to be made under the code as it works with the industry on energy security. The period during which the code was being developed was blamed for investment uncertainty that further risked new supply commitments. But many large-scale energy users welcomed the final code, saying it will prevent future price shocks.

Only seven domestic gas agreements were executed between September 2022 and February 2023 for supply next year, a 46pc fall from January-August 2022 and 22pc lower than September 2021 to February 2022, the Australian Competition and Consumer Commission (ACCC) said in June.

The federal government signed a heads of agreement last year with all three LNG exporters at Queensland's Gladstone for an additional 157PJ of supply in 2023 to shore up east coast supplies, just after extending the Australian Domestic Gas Security Mechanism to 2030 that gives the ability to order LNG projects to divert more gas to the domestic market. The supply arrangements will be overseen by the ACCC, which has emphasised that uncontracted gas supplied to the domestic market is essential to avoid a supply shortfall.

APLNG's 2023-24 output is now expected to be towards the top end of the guidance range of 680-710 PJ, driven by better than expected execution of workover activity and production optimisation programmes, Australian independent Origin said. Origin is the upstream operator of APLNG with a 27.5pc stake, with downstream operator ConocoPhillips holding 47.5pc and China's state-controlled Sinopec 25pc.

Senex, jointly owned by Australian gas energy firm Hancock and South Korea's Posco, aims to develop its A$1bn ($657mn) Atlas project in Queensland's Surat basin](https://direct.argusmedia.com/newsandanalysis/article/2486435) and reach 120 PJ/yr output by 2027, exporting to South Korea post-2025. Senex this month increased its assets in the Surat basin in a A$12.5mn deal to acquire a 50pc stake in the Range gas project.


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15/10/24

Lignite displaces gas in German power mix

Lignite displaces gas in German power mix

London, 15 October (Argus) — Rallying German gas prices have pushed a significant amount of gas-fired generation out of the country's power mix this month, opening space for lignite. Average daily gas-fired generation in Germany has slipped to 3.8GW so far this month from 4.2GW in September and August and 4.1GW in July. During that time, lignite-fired generation climbed to 9GW from 7.2GW in September and August and 7.4GW in July. Coal-fired generation has also edged down to 2.9GW so far this month from just over 3GW in September, but higher than the averages of 2.3GW in August and 1.4GW in July. Meanwhile, supporting demand for thermal-fired generation, German renewables output has fallen to 30.3GW so far in October from just under 32GW in September when wind generation stepped up, but slightly above the 29.5GW in August when wind output was lower. Remaining German power demand in recent weeks has been covered by imports, which have risen to a net 3.8GW so far this month from 3.4GW in September, but remained well below the 6.2GW in August. Electricity imports from neighbouring countries such as France are occasionally cheaper than domestic generation and can help fill in gaps between German power demand and supply. A combination of changing renewable output, higher gas prices, stable lignite prices and lower emissions prices have spurred changes in the German power mix. The German THE day-ahead has risen strongly since late July and prices have rallied in recent weeks against a backdrop of rising geopolitical tensions in the Middle East. Meanwhile, German lignite-fired plants typically source fuel from nearby mines, substantially insulating domestic lignite prices from external market forces. German regulator Bnetza assumed earlier this year that domestic lignite would cost about €3/MWh in 2024-25. At the same time, near-term prices in the EU emissions trading system (ETS) — a key driver of competitiveness for German lignite-fired generation — have fallen. Prompt ETS allowances closed at €65.36/t of CO2 equivalent (CO2e) on Monday, down from €72.14/t CO2e on 19 August, boosting the profitability of lignite-fired plants, which are the more CO2 intensive than coal and gas. Those recent price shifts have made output from lignite-fired plants with a typical efficiency of 36pc more profitable than normal 55pc-efficient gas-fired plants as well as coal-fired stations operating at 40pc efficiency, which have also become more profitable . By contrast, in the first eight months of this year, 36pc-efficient lignite-fired plants had competed tightly with 55pc-efficient gas-fired plants even as gas prices fell to the bottom of the coal-to-gas fuel-switching range ( see fuel-switching graph ). Buffer zone More competitive lignite-fired generation has also started acting as the domestic buffer to cover gaps between supply and demand left by renewable generation ( see power generation graph ). After Germany renewable generation dropped to 26.8GW on 2-9 October from a strong 45.5GW on 26-28 September, lignite-fired generation jumped to 10.1GW from 6.4GW — a 57pc gain — while gas-fired output only rose to 3.5GW from roughly 3GW and coal-fired generation increased to 2.9GW from 2.3GW. In December-July, when the gas and lignite fuel-switching range was tight, generation from both fuels reacted similarly to fluctuations in renewable output and both plant types buffered their generation based on demand ( see power generation graph ). And forward prices assessed by Argus suggest that lignite-fired generation could remain competitive against gas and coal-fired output in the German power mix next month. As of market close on Monday, November-dated fuel and emissions prices would place the operating costs of a 36pc-efficient lignite-fired plant during that time below those of a 55pc-efficient gas-fired plant and a 40pc-efficient coal-fired plant. That said, Germany's decreasing lignite and coal-fired generation capacity limits how much of the national power mix those plant types can provide. As of April, Germany had 82.4GW of gas-fired capacity, but just 15.1GW of lignite-fired capacity and 11.5GW of coal-fired plants, according to Bnetza. By Lucas Waelbroeck Boix Fuel switching range €/MWh Power generation by fuel, 7 day average GW Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Mexico’s Sep inflation slows with energy prices


10/10/24
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10/10/24

Mexico’s Sep inflation slows with energy prices

Mexico City, 10 October (Argus) — Lower energy prices supported an easing in Mexico's consumer price index (CPI) in September for a second consecutive month. The CPI slowed to an annual 4.58pc in September, down from 4.99pc in August, Mexico's statistics agency Inegi said on 9 October. This was lower than both Mexican bank Banorte's own 4.59pc estimate and its analysts' consensus estimate of 4.61pc. Energy inflation eased for a second month, dropping to 6.9pc from 7.9pc in August and 9.2pc in July, with LPG prices — the largest component — slowing to 14.7pc in September from 16.8pc in August and 25.6pc in July. Seasonal rains, now ending, have largely reversed the price spikes in farm goods caused by extreme drought earlier this year, with fruit and vegetable inflation slowing to 7.65pc in September from 12.6pc in August, making it the first single-digit rate since November 2023. "Despite the positive performance of agricultural items since August, lingering risks could turn them negative again," Banorte said in a note, emphasizing that above-normal rainfall will be needed in the coming months to avoid a return to drought and price spikes next year. For now, Mexican weather agency Conagua still estimates relatively heavy rains in October, but "more adverse" conditions for November and December, with no state forecast to exceed the upper range of historical rainfall. Core inflation, which strips out volatile food and energy, eased in September to 3.9pc from 4pc, moving within the central bank's 2pc to 4pc target range for the first time since February 2021. Inside core, said Banorte, packaged and manufactured goods continue to improve, standing at 2.9pc from 3pc in August. Services also moderated, adjusting to 5.1pc from 5.2pc. "A downward trend in the latter is needed to corroborate additional gains for the core," Banorte said. "This will still take some time, especially given that the margin for additional declines in goods may be running out." The Mexican bank added that within this context, it maintains its estimate for full-year 2024 core inflation to hold to 3.9pc. Though less weighted than core inflation, the bulk of September's easing in the headline was due to non-core inflation, including prices on more volatile items such as fuels and farm goods. Inegi reported non-core moving to 6.5pc in September from 8pc in August. Despite two months of better-than-expected price improvements, Banorte warned that "risks remain," with energy prices susceptible to gains amid "geopolitical tensions in the Middle East and economic stimulus in China." Still, there is "room to adjust gasoline subsidies" to cushion these effects, it added. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Hurricane Milton leaves 3.4mn in the dark


10/10/24
News
10/10/24

Hurricane Milton leaves 3.4mn in the dark

New York, 10 October (Argus) — About 3.4mn customers in Florida were without power this morning after Hurricane Milton pummeled the state with heavy rainfall and strong winds. Utility crews began the process of assessing and repairing the damage caused by the hurricane which tore down trees and downed power lines after slamming into Florida's west coast as a powerful Category 3 hurricane late Wednesday. Florida Power & Light had about 1.2mn homes and businesses without electricity, Duke Energy reported about 875,000 outages, while about 592,000 customers of Tampa Electric were affected, according to independent tracker Poweroutage.us. Milton, which has since weakened to a category 1 storm with maximum sustained winds of 85mph, is now moving off the east coast of Florida. "On the forecast track, the center of Milton will continue to move away from Florida and pass to the north of the Bahamas today," according to the National Hurricane Center. The risk of life-threatening storm surge remains on the eastern coast of Florida, while hurricane-force winds are expected to linger for a few more hours. Major flooding as a result of heavy rainfall also continues to pose a threat. A recovery in road fuel supplies, which were strained by the pre-storm evacuation of hundreds of thousands of residents, will depend on the extent of power, roadway and port outages. The state has waived statutes regulating the sale, storage and distribution of liquid fuels . By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US inflation slows to 2.4pc in Sep


10/10/24
News
10/10/24

US inflation slows to 2.4pc in Sep

Houston, 10 October (Argus) — US inflation slowed slightly less than expected in September, but still came in at the lowest annual rate since February 2021, in the first major inflation report since the Federal Reserve started cutting interest rates last month. The headline consumer price index (CPI) eased to an annual 2.4pc in September, down from 2.5pc in August, according to the Labor Department. The decline was less than the 2.3pc forecast in a survey of economists by Trading Economics. Excluding volatile food and energy, so-called core inflation rose to a 3.3pc annual pace, higher than forecasts for core inflation to match the prior period's 3.2pc pace. Today's report is the final CPI report ahead of the next Federal Reserve policy decision on 7 November and it follows a much stronger than expected employment report for September, which together could prompt the Fed to move more cautiously. Still, CPI has come down sharply from its peak of 9.1pc in mid-2022 and, despite aggressive Fed tightening, hiring has continued at a healthy rate and the overall economic expansion remains on track, partly thanks to falling energy prices. The energy index contracted by an annual 6.8pc pace in September after contracting 4pc through August. The food index rose by an annual 2.3pc following a 2.1pc gain in the prior period. Transportation services rose by 8.5pc. Within energy, the gasoline index fell by 15.3pc after a 10.3pc decline in the prior period. Energy services rose by 3.4pc after a 3.1pc gain. Natural gas services rose by 2pc. Shelter rose by 4.9pc after a 5.2pc gain. Transportation services rose by 8.5pc following a 7.9pc gain. Auto insurance was up 16.3pc. On a monthly basis, CPI rose by 0.2pc in September, matching gains in August and July, Labor said. Shelter rose by 0.2pc and food increased by 0.4pc, together accounting for over 75pc of the monthly headline increase, Labor said. The energy index declined by 1.9pc over the month, after falling by 0.8pc in the prior month . By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Strike starts at Chevron Australia's LNG sites: Update


10/10/24
News
10/10/24

Strike starts at Chevron Australia's LNG sites: Update

Adds comment from Altrad spokesperson in paragraph 3 Sydney, 10 October (Argus) — Members of Australian LNG workers' union the Offshore Alliance (OA) that are employed by companies owned by engineering firm Altrad are undertaking protected industrial action (PIA) at Chevron Australia's two LNG facilities. About 140 gas maintenance workers began rolling stoppages and work bans today because of dissatisfaction with negotiations for a new enterprise bargaining agreement, the OA said. The PIA can occur for 30 days from when the results of a union members' ballot was declared on 2 October, and may be extended if agreed by the Fair Work Commission. Altrad remains committed to the continuing bargaining process, a spokesperson for the firm said on 10 October, promising to "continue to seek an equitable outcome to negotiations" in the interests of employees and Altrad. Workers are demanding union rates and conditions on every offshore and onshore oil and gas facility, the OA said, promising to push back against baseline workplace agreements presently in place. Striking staff include technicians, scaffolders, riggers, painters and plasterers working for Altrad at the Chevron's 8.9mn t/yr Wheatstone LNG and 15.6mn t/yr Gorgon LNG facilities in Western Australia state, as well as Wheatstone's offshore platform. Chevron Australia is aware Altrad employees have started industrial action, but said no impact to production are expected. "Given the nature of the work undertaken by Altrad and the mitigations in place, it is not anticipated there will be any impact to LNG and domestic gas production nor to any critical business activities at our facilities," a Chevron spokesperson said on 10 October. The dispute comes almost 12 months after Chevron reached an agreement with the OA — formed by the Australian Workers' Union and Maritime Union of Australia — on three deals regarding pay and conditions at its LNG terminals and upstream facilities. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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