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Domestic gas prices set to rise when LNG plants start up

The first production train and tanks near completion on the QCLNG project on Curtis Island, Gladstone.
The first production train and tanks near completion on the QCLNG project on Curtis Island, Gladstone.

THE price of gas on Australia's east coast could triple when the first of the region's liquefied natural gas export projects begin operations, analysts have warned.

With QCLNG scheduled to begin exports next year, analysts have warned that the project's LNG production rate would outstrip regional domestic demand.

The price of LNG currently sits at $4 a gigajoule, but analysts have forecast domestic prices will rise to the international process price of $12 a gigajoule.

Grattan Institute energy fellow Lucy Carter said the cost of producing gas was rising.

"The real challenge with gas prices is that you can have a scenario where there can be a $12 price," Ms Carter told The Australian.

"But there could also be a scenario where there is a $6 or $7 gas price."

"And both of those would be reasonable. So there is huge uncertainty about where the gas price is going."

Ms Carter said that international LNG prices alone would not dictate domestic prices.

"The wellhead price is going up because a lot of the cheap stuff has been produced and because unconventional gas (coal-seam gas and shale) costs more to get out of the ground," she said.

"Because of those two underlying price drivers (the Queensland LNG export projects and production costs) gas is unlikely to go back to $3 or $4 as a long-term measure."

Topics:  curtis island gas gas prices lng qclng resources



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