Author: Brian Robins Source: SMH.COM.AU Date Published: May 14, 2017
The backers of a proposed project to pipe gas from Narrabri, in north-west NSW, to Newcastle, are seeking government backing to force the gas from the project to be sold in NSW, rather than be transported across state borders for export abroad.
The push comes as the manufacturing sector is gripped by surging gas prices, which have forced a number of companies to look hard at closing operations, to avoid looming losses.
Domestic gas prices have surged in the wake of the construction of several gas export projects in Queensland, which has linked east coast gas prices to international prices for the first time. As a result, large industrial users of gas have been hit by a spike in contract gas prices, as they scramble to secure supplies.
Concerns about a shortage of gas for domestic users prompted the Federal government late last month intervened to force gas companies to demonstrate.
"We want the NSW government to step in and ensure gas from Narrabri can only be sold to NSW users, and cannot be moved across state borders," Garbis Simonian, the prime mover behind plans to build a new pipeline linking Narrabri to Newcastle, north of Sydney
Government approvals have been in place for several years now to construct the so-called Hunter Gas Pipeline from Queensland to Newcastle, which would link with Narrabri.
This month, Hunter Gas Pipeline signed a memorandum of understanding with Jemena for the China-controlled utility to build and operate the pipeline, which is estimated to cost $500 million. To be privately financed, the project is conditional on the development of the Santos Narrabri Gas Project, commercial offtake agreements with customers, landholder agreements and minor permits and approvals.
"Jemena has a strong track record in pipeline development, construction and operation in Australia," Jemena general manager of business development David Green said.
"NSW gas users are now being asked to pay more for Australian natural gas than customers in Japan, China, Malaysia and Korea. Queensland LNG projects are hoovering up gas to preserve their own capital and shifting the commercial risk of their investments to Australian gas customers," Hunter Gas Pipeline managing director Garbis Simonian said.
"They created this problem and they are not expanding gas production for the domestic market fast enough. That is just not acceptable."
The Narrabri Gas Project could supply up to half of NSW natural gas needs and must be approved, developed and brought to Newcastle so gas is guaranteed for the NSW domestic market, as a matter of urgency, he said.
The NSW Government estimates the top 500 industrial gas users provide more than 300,000 jobs which rely on an affordable, secure supply of natural gas. Mr Simonian warned: "Those 300,000 NSW jobs in gas-reliant manufacturing are at risk without fast-tracked development of affordable domestic gas."
Santos is seeking to develop the Narrabri gasfield. It is also a major investor in one of Queensland's gas export projects and is believed to be lacking sufficient gas reserves to meet its export commitments.