The growing demand for energy resources and the redistribution of supply chains around the world are causing concern in Australia, which wants to protect its internal market.
The gas market in the Asia-Pacific region, which suffers from limited supply, competition with European countries and rising prices of energy resources, would face a new challenge in the event of a reduction in LNG exports. (LNG) from Australia, reports CNBC.
The Australian Competition and Consumer Commission (ACCC) called on the national authorities on August 7 to protect domestic gas supplies and curb LNG exports in the face of a possible shortage of around 56 petajoules (energy measurement unit) of gas the following year on the east coast of the country.
“To protect energy security on the East Coast, we recommend that the Resources Minister initiate the first step of the Australian Domestic Gas Security Mechanism (ADGSM),” said ACCC Chair Gina Cass-Gottlieb. The ADGSM is a mechanism intended to ensure sufficient supply of natural gas to meet the anticipated needs of energy users within the country.
Most LNG supplies are under long-term contracts, with Australian producers sometimes selling their products without prior agreement on the spot market. However, the 80% increase in LNG prices, according to the Platts JKM index, resulted in “since April, there have been no tender sales [al contado] three major LNG export facilities on Australia’s east coast, indicating that some exports were slowing down,” said Kenneth Foo, regional pricing manager for S&P Global Market Intelligence APAC LNG.
Consequently, Asian developing countries that mostly bought LNG on the spot market are now suffering from fuel shortages and blackouts, “bringing countries to the brink of economic collapse,” said Sam Reynolds, an analyst at the Institute of Energy Economy and Financial Analysis. At the same time, possible supply cuts “would have minimal effects on buyers such as Japan, South Korea and China, which buy 70% to 80% of their LNG through long-term contracts,” he added.
The tension in the market is also increasing due to the increasing competition between Asian and European countries and the redistribution of supply chains. Recently, European Union nations turned to producers in the region after suffering the effects of their own sanctions introduced against the Russian energy sector following the start of Moscow’s special military operation in Ukraine.
Source: RT
