09/02/2015 - 16:25

Gas sales an uncertainty

09/02/2015 - 16:25

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The North West Shelf’s six joint venture partners have yet to declare their hand as a deadline for ending their joint gas marketing agreement draws near.

The North West Shelf’s six joint venture partners have yet to declare their hand as a deadline for ending their joint gas marketing agreement draws near.

Any decision by North West Shelf’s partners: BHP Billiton, BP, Chevron, MIMI (Mitsubishi Corporation and Mitsui & Co), Shell and operator Woodside Petroleum to market both their domestic and export gas separately would have a big impact on competition, particularly in Western Australia’s domestic gas market.

Credit Suisse oil and gas analyst David Hewitt told Business News it was possible NWS’s partners might be exploring splitting up their marketing of export gas, especially since Woodside had been increasing its liquefied natural gas trading portfolio, particularly with the finalisation of its $US2.75 billion purchase of Apache Energy’s stakes in LNG projects Wheatstone and Kitimat.

“As we come to the end of a number of the legacy contracts, and given a question of how much proven reserve there is in the North West Shelf venture, is it an opportune time for the venture partners to consider equity marketing for LNG going forward?” Mr Hewitt asked.

However, Economics Consulting Services managing director Murray Meaton said he would be surprised if the NWS’s joint marketing arrangements didn’t continue.

“They’ve always taken a view that the security of the project is based on joint marketing and that stability, and I would expect them to continue to do that both domestically and internationally,” he said.

Business News can reveal the NWS project, which in past decades was touted to supply two thirds of WA’s domestic market and in recent years was widely believed to supply between 55 and 60 per cent of the market, produced less than half (48 per cent) of WA’s total domgas supplies last year.

In 2014, the WA domgas market produced 980 terajoules per day, of which an average of 470TJ/day came from the NWS. Other major domgas suppliers include Apache Energy’s Varanus Island and Devil Creek projects, and BHP Billiton’s Macedon project.

The Australian Competition and Consumer Commission said continuing NWS’s joint marketing arrangements after the end of this year would not be in the public interest.

Long-time opponents of the NWS joint marketing arrangements, the DomGas Alliance, told Business News there was no clear or logical reason why the NWS should market jointly, citing Treasurer Mike Nahan’s arguments that separate marketing would increase competition and drive down prices.

“The reality in the marketplace at the moment is that our members are already struggling to secure the volumes of gas they need and the length of contracts they need,” DomGas Alliance executive director Matt Brown said.

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