New deal with Gladstone LNG giants to slash prices
Despite a new deal to offer cheaper gas to Australia, Prime Minister Scott Morrison doesn't know how much new gas prices will be.
On Thursday during his Gladstone visit, Mr Morrison revealed a new Heads of Agreement with east-coast liquefied natural gas (LNG) companies which would bring a boost to the region.
The agreement, signed by Mr Morrison and LNG exporters Australia Pacific LNG, Queensland Curtis LNG and Gladstone LNG, aims to ensure more gas is offered to the domestic market, more often, and on more competitive terms.
It will also aim to secure competitively-priced gas supply for the east coast market at least until 2023.
Speaking to the media at the Northern Oil Refinery on Thursday, Mr Morrison said gas was the key to the COVID-19 recovery in Australia.
"It's the key to jobs, it's the key to a manufactory industry here in Australia, and heavy industry that would under-right our economic fortunes in the future," he said.
"Gas is the key transition fuel to ensure that we can make a transition to a net zero economy."
Since the Government first acted in mid-2017 to ensure gas supplies for the domestic market through the introduction of the Australian Domestic Gas Security Mechanism and the first Heads of Agreement, the spot price for gas has dropped from $12.50 to $10.50 a gigajoule to now be between $7 to $5 a gigajoule.
APPEA Chief Executive Andrew McConville said, as confirmed by both the ACCC and International Gas Union, Australian domestic gas prices were lower than prices paid by Asian customers for Australian gas.
"Individual prices offered to domestic gas users will continue to be internationally competitive and have regard to the producer's cost of supply and factors that may be relevant to users' individual circumstances, including the terms and conditions of their gas supply agreement and any applicable transportation or retailer charges," Mr McConville said.
It is believed gas would drop to less than $5 a gigajoule under the new agreement.
But despite the new deal, Mr Morrison said he couldn't "speculate" on how much gas prices would be.
"Where (gas prices) gets to, ultimately the market will determine but I think we are striving to get those prices down," Mr Morrison said.
"I'm not going to speculate (on how much it will be), all I know is what we are doing is putting downward pressure on the prices.
"What happens next is how that plays out on the market."