Australia’s natural gas price remains high as it becomes biggest LNG exporter

Global Business

Australia is on track to become one of the world’s biggest exporters of liquid natural gas – thanks to an increase in production and an abundance of the natural resource.

But that huge focus on the global market has come at a cost to Australia’s domestic consumers – who pay some of the highest prices in the world.  

CGTN’s Greg Navarro reports.

Follow Greg Navarro on Twitter @greg_navarro

Ask most Australians what they think about the price they pay to use natural gas in their homes­ and nd you’ll find a common response. 

“We are still seeing potentially a 50 percent increase or more in gas bills,” Energy Policy Lead of Public Interest Advocacy Centre, Craig Memery said. 

Here’s something else to consider: despite Australia’s reputation as a relatively hot country, most of the population lives in more temperate climates such as here in Sydney, where it gets cold enough over a several-month-period that heating your home becomes a necessity.

“Every winter because I’m always cold we do have the gas heating on, sometimes two gas heaters. However, we do have to sacrifice something else, whether it’s one dinner for the month but we do have to sacrifice something because of the cost around winter,” a natural gas user, Anne Juresic said. 

What makes that rising price even harder for many people to accept is just how much of the natural resource exists right under their feet.

“We have got an abundance of natural gas – approaching something like 200 trillion cubic feet of natural gas in reserve,” the Resource Analyst of Fat Prophets, David Lennox said.

About five years ago, producers turned their attention to the export market and began building multi-billion dollar processing facilities to convert that gas into liquid natural gas – or LNG.

By 2016, experts predicted that more than 60 percent of Australia’s LNG was exported overseas.

“Because natural gas is being channeled toward LNG gas rather than into the domestic market we are finding that Australia’s domestic market is falling somewhat short of gas supplies,” Lennox said.

“For large energy users, commercial energy users who are reliant on large volumes of wholesale gas, their gas price has doubled or even tripled in recent years as the gas export market was opened up,” Memery said.

Memery said as the focus shifted to exports, no policy was put in place to ensure reserves were available for Australia’s domestic market.

“No government wants to interfere with the export market although the commonwealth government has recently announced that they are prepared to put a bit of a safety net in there in the event that prices get too high looking at how gas could be exported and shipped,” Memery said.

The price of LNG has dropped recently because of a global oversupply.

Adam Creighton explains how Australia’s economy is faring

CGTN’s Rachelle Akuffo spoke wuth Adam Creighton about Australia’s economy. Creighton is the economics correspondent with The Australian.