2007 upstream gas price in Victoria, Queensland, NSW, South Australia falls between A$2.00 per GJ and A$3.50 per GJ

The price for gas sold under contract in Eastern Australia was usually a confidential agreement between the gas suppliers and the gas buyer, according to a report, Availabiliy and Cost of Gas for NSW Baseload Generation, (31/7/2007) prepared for the Owen Inquiry by Wood Mackenzie.

Gas secrets no secret any more: The gas price negotiated might be fixed for the term but was more likely to have some annual escalation (generally linked to CPI) and/or a price review at pre-determined intervals over the life of the contract. The report said: “Despite the confidentiality of gas contracts in Australia, Wood Mackenzie has a broad insight into the likely gas price of contracts in Eastern Australia based on our in-depth market knowledge, and generalised feedback from the key players within the market (both upstream operators and participants alike).”

A$2.00 per GJ and A$3.50 per GJ: The current upstream price of gas in Eastern Australia fell between A$2.00 per GJ and A$3.50 per GJ. Wood Mackenzie analysed:

• time of the contract signing (contracts were signed in different years across a variety of market conditions);

• different contract terms such as contract volumes, firmness of supply, take-or-pay conditions, flexibility in daily quantity;

• location of the supply source relative to the available market and competing supplies (transportation differentials); and

• supply risk ( the level of certainty on reserves and production for a supply source).

Reference: Owen Inquiry into Electricity Supply in NSW, Availability and Cost of Gas for NSW Baseload Generation, 31st July 2007
This report was prepared for the Owen Inquiry by Wood Mackenzie. Sydney, Suite 108,Level 1, 16-20 Barrack Street, Sydney, NSW 2000, Australia. Phone: +61 2 9299 0989. Fax: +61 2 9299 0669 Consultants: Ian Angell, Phone: +65 6518 0862; Andrew McManus, Phone: +61 2 9299 0989; Richard Quin, Phone: +44 131 243 4378; David Bradley, Phone: +61 8 9430 9599; Graham Tyler, Phone: +65 6518 0823; Valery Chow,Phone: +65 6518 0854; Karthikeyan Sathyamoorthy, Phone: +65 6518 0853; Facsimile: +61 2 9299 0669, e-mail: Andrew.McManus@woodmac.com

Erisk Net, 31/7/2007