Eastern Australian Gas Price Projections

Alan Smart 

Published 2020-10-01

ACIL Allen has produced its latest edition of the gas price projections report for the eastern Australian gas market.

In this edition, ACIL Allen further analyses the impacts of the COVID-19 pandemic and other recent global and local developments on the eastern Australian gas market. It is clear that great uncertainty still exists in the market courtesy of COVID-19 and debate over the future role of gas. ACIL Allen has modelled three plausible scenarios – a Base, High and Low case. These scenarios are developed to project how gas prices might move under different market conditions which are heavily influenced by how successfully markets respond to COVID-19.

In our Base Case scenario, we assume that domestic demand remains fairly steady with LNG exports returning to levels near nameplate capacity over the medium term (out to 2025). On the supply side, the Narrabri gas project by Santos is developed, so too the AGL LNG import terminal in Victoria. Supply over the projection period is also propped up by smaller conventional gas projects in the Bass Strait, Arrow’s Surat gas project in Queensland and early development of unconventional supply in the Cooper and Beetaloo basins.

In our High and Low scenarios, we project different assumptions on the path global and domestic markets take in recovering from COVID-19 and the fundamentals on the demand and supply sides of the market. In the High Case, global demand for gas and LNG recovers more quickly, resulting in higher international prices which results in a stronger recovery in domestic gas prices over the medium term and a higher level of demand over the long term for LNG. However, the Low scenario projects a weaker recovery in global oil and LNG markets which has flow-on effects for domestic gas supply and prices.

Overall, our latest projections suggest that gas prices over the long term still increase in all three cases. However, some sources of supply and the volumes of supply LNG proponents make available to the domestic market are highly influential to how quickly or slowly gas prices increase.

For more information or to purchase the report, please contact Michael Symes at m.symes@acilallen.com.au

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