- Manufacturers claim gas prices are three times more than the historical prices
- Customers are unwilling to commit to long-term supply agreements
ExxonMobil, the leading oil and gas corporation headquartered in Texas, U.S., has reportedly canceled plans for building a gas import terminal over the Victorian coast. This has induced worry among the large energy users regarding the lingering supply shortfall and the increasing costs that will challenge southern states in Australia.
Apparently, energy producers had been considering a terminal for importing liquefied natural gas (LNG) from different parts of Australia and overseas as the increasing urgency was fueled by a tightening gas market. With the shutdown of factories in New South Wales and Victoria, manufacturers have been blaming the high cost for gas of up to $12 per gigajoule, which is over three times more than the historic prices.
ExxonMobil stated that it undertook an extensive study to gauge the potential for all the LNG imports, that could offset the swift production decline from the oil and gas fields located in the Bass Strait it owns in partnership with BHP.
The global energy giant commented that it has been engaging with the customers to access their interests concerning their commitment to longer-term supply that could help underpin the major investment for the new terminal. The customers, however, were unwilling to strike such long commitments.
The federal government could impose laws which restrict gas exports, that could lower prices. This has deterred potential customers from committing into long-term contracts with the company.
The Turnbull government had introduced Australian Domestic Gas Security Mechanism in 2017, which could enforce gas exporters to divert all the supplies towards the domestic market if there were to be a shortage forecast in the following year. The mechanism has not been triggered yet.
Matt Canavan, Federal Resources Minister said that it depended on the investors if they wanted to invest in import terminals. He further added that there have been several proposals for investment and the federal government has been supportive of the investment made in the company’s gas infrastructure network.