WA under pressure as gas prices double | Mining & Energy | The Australian

WA under pressure as gas prices double

DOMESTIC gas prices in Western Australia have more than doubled in the past year with the latest contracts understood to have reached $5.50 a gigajoule.
But prices in the eastern states are relatively stable because of long-term supply contracts signed earlier this decade by Origin and AGL, and competition with coal.
The West Australian price surge comes as gas customers are complaining there is insufficient domestic gas supply to fuel new projects.
Yet producers say there is plenty of gas; it's just the potential customers are not prepared to pay today's historically high rates.
Last month, Santos announced it had secured a new gas contract to supply Newmont Australia's Jundee goldmine and the Parkeston power station at Kalgoorlie for three years from the John Brookes field in which it has a 45 per cent stake, with Apache Energy holding the rest.
While Santos has not disclosed the price, it is understood Newmont has paid about $5.50 a gigajoule.
The latest edition of EnergyQuest's quarterly review of an Australian energy statistics shows that new West Australian domestic contract sales are being struck at an average of more than $5 a gigajoule.
A year ago the average price for domestic gas reported by the West Australian Department of Industry and Resources was $2.43 a gigajoule.
The equivalent DOIR price for LNG exports was $7.56gj, up from $6.46 a year earlier.
WA Premier Alan Carpenter, last year instituted a new policy that demands new LNG project proponents commit 15 per cent of their reserves to domestic use if commercially viable.
At the time Mr Carpenter said the move had nothing to do with keeping domestic prices low but everything to do with LNG prices being higher than domestic prices, thus threatening future supplies of gas for domestic use.
EnergyQuest chief executive Graeme Bethune said average prices received by Australian LNG producers fell by 3.4 between the December quarters of 2005 and 2006, which he ascribed to lower international oil prices, to which LNG sales contracts are linked.