02/07/2008 - 12:51

State govt launches gas trading scheme

02/07/2008 - 12:51


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The state government will launch an online gas trading bulletin board on Thursday, but energy minister Francis Logan warned the scheme is not the sole answer to the gas supply crisis.

The state government will launch an online gas trading bulletin board on Thursday, but Energy Minister Francis Logan warned the scheme is not the sole answer to the gas supply crisis.

Mr Logan described the online trading scheme as a 'dating agency' for gas trading, but warned the initiative is not the "salvation" for the gas supply crisis that was caused by a pipeline rupture at Apache Energy's Varanus Island facility.

"Can I just stress that it is not the salvation for the gas issue, it isn't," Mr Logan said at a conference today.

"It's just an instrument that we are making available, free of charge to businesses so they can get price visibility and volume visibility in whatever spare gas is available."

The bulletin board, which will be operated by the Independent Market Operator (IMO), will match potential gas buyers with sellers, displaying offers and bids for gas, while providing historical information of past trades.

"It does work, I presume, like a dating agency where the seller and the buyer are brought together and then they go off and undertake the contract," Mr Logan said.

"What we're asking of those people who undertake that contract (is) that they provide some data from that contract on volume and price and it will be historical to the IMO and they will then be able to put that up on their screen."

Mr Logan said that the transparency of the online board will stop companies from price gouging, however admitted that the names of companies using the online trading scheme would not be published.

"Nobody will be named...Its transparency in terms of price and volume," Mr Logan said.

Liberal Leader Troy Buswell said in a statement that he 'cautiously' welcomes the trading framework, but expressed concerns about the lack of action to prevent price gouging, as well as the lack of relief for small businesses.

"The opposition has maintained that a list of available gas and who receives it should be published daily. This would go a long way to the transparency and accountability that is so lacking with this announcement that deserves the scrutiny of parliament," Mr Buswell said.

"Small businesses get no relief from this announcement and that is an indictment on the Premier and his hapless minister."

Mr Logan said that before the Varanus Island incident, companies buying a large volume of gas paid roughly $8 to $8.50 per gigajoule, while the energy equivalent in diesel is priced at $30 to $35.

He said that a fair trade price for surplus gas would fall between those two figures.

Companies who buy gas via the online board will also have to ensure transportation of gas via the Dampier to Bunbury Natural Gas Pipeline, with only two companies, Alinta and Synergy, able to transport gas throughout the metro area.

"The buyers also need to be aware that they need to ensure transportation of that gas to them," Mr Logan said.

"So whoever they buy off, whoever that seller is, they'll need to actually ensure from that seller that they can actually transport that gas to them."

"That's why it will be interesting to see how many smaller players will actually use this because you've got to have that transportation ability to be able to deliver the gas to your premises."

Mr Logan said that smaller companies may buy gas through their retailer, such as Alinta or Synergy, to ensure transportation and delivery to its facilities.

Chamber of Commerce and Industry of Western Australia Executive Director Trevor Lovelle said that the chamber has been calling for the creation of a simple and clear mechanism to match gas customers with suppliers, with sharing of information crucial.

The bulletin board is expected to run until December, which is when Apache is expected to resume full production from its Varanus Island facility.


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