An aerial view of the three LNG export sites at Curtis Island.
An aerial view of the three LNG export sites at Curtis Island. Ashley Roach - Fullframe Photogr

'Bad place': ACCC lashes out at Curtis Island exports

THE nation's consumer watchdog has delivered a verbal spray to Gladstone's $70 billion LNG export industry and recommended the Federal Government "pull the trigger" on its new gas policy.

The Australian Competition and Consumer Commission said in an electricity review update this week the ramp up of six LNG export trains on Curtis Island caused "significant disruption" to the market.

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Indicating its support of the Federal Government triggering its Australian Domestic Gas Supply Mechanism, the ACCC said the LNG industry was in a "bad place".

The Federal Government is expected to announce on October 1 if it will exercise its new gas ban powers in 2018, in a bid to lower Australia's gas prices.

ACCC chairman Rod Sims' announcement of his support for new gas policy this week added to the stress felt within the gas industry of the looming ban.

"(The ADGSM) is anathema to anyone with any pro market inclinations," he said. "But consider the choices: The Federal Government may be faced with a choice of pulling the trigger on the mechanism, or seeing factories close and jobs lost ... This is a bad place to be."

He said announcements from the owners of the three Curtis Island LNG plants of new domestic supply contracts and gas swap deals had not made "any serious inroads" into the problem.

Shell will sell 75 petajoules of gas to east coast customers from its QGC project this year and Origin Energy's APLNG supplies about 20 per cent of the east coast gas market via long term gas supply agreements.

Meanwhile Santos' GLNG project, the only site to use third party gas to fill export contracts, has announced new domestic gas market deals recently.

Wood Mackenzie senior gas analyst Saul Kavonic, who has warned the export ban would not impact gas prices, said triggering it would cause more issues, including a halt to gas production.

"Since March, Shell, Santos and the GLNG JV have announced additional supply to the domestic market, which should eliminate any material supply gap for 2018," he said.

"Yet, the government may declare a gas shortfall anyway and restrict exports, in continuation of the tough populist stance it has taken."