Australia secures new gas deals for east coast energy markets

Posco International

22/01/2024 24:12

SYDNEY, Jan 22 (Reuters) - The Australian government
said on Monday it had reached new gas supply deals for its east
coast energy market, easing some concerns over long-term supply
gaps as the country moves rapidly away from its dependence on
coal-fired power stations.
    More than 260 petajoules (PJ) of gas will be supplied
through 2033 in two new enforceable commitments with Exxon
Mobil's  XOM.N  Esso unit and Woodside  WDS.AX  under the
government's gas code rules, Energy Minister Chris Bowen said.
    Australia last year extended a price cap of A$12 ($8) per
gigajoule on natural gas until at least mid-2025, but it relaxed
the rule for big producers if they agreed on domestic supply
commitments for the country's east.
    "Gas is critical to supporting a lower-cost, more renewable
grid as aging coal exits, and to support Australian
manufacturing," Bowen said in a statement.
    The supply deals, sufficient to power east-coast gas-fired
power stations for around two-and-a-half years, will directly
feed into stations previously identified as being at particular
risk of seasonal shortfalls, Bowen said. This will ensure enough
domestic supply to keep downward pressure on prices, he said.
    Australia's energy market operator in March said the country
faced risks of long-term supply gaps and must require additional
commitments to expand its domestic gas supply.
    Though Australia produces more gas than it needs to meet its
domestic demands, most supply is contracted for exports.
    The Labor government targets 82% of power to be supplied
from renewable sources by 2030 and considers gas a critical
element in the transition to cleaner energy.
    The latest commitments follow deals reached in November 2023
with Australia Pacific LNG (APLNG) and Senex Energy, controlled
by South Korea's Posco International  047050.KS , to supply up
to 300 PJ of gas to 2030. APLNG is a joint venture between
ConocoPhillips, Origin Energy, and Sinopec.

    ($1 = 1.5168 Australian dollars)
    
    

 (Reporting by Renju Jose in Sydney; Editing by Sonali Paul)
 ((renju.jose@thomsonreuters.com; +61 29171 7126; Reuters
Messaging: @renjujose))