❓ Question addresses the potential impact of Gorgon gas contracts on domestic gas prices and the Premier's previous statements on the issue. The Premier acknowledges upward pressure but emphasizes security of supply and future competition.
AnsweredQoN 863Legislative Assembly
QuestionView source ↗
GORGON GAS CONTRACTS — ENERGY PRICES
I refer to the signing of contracts between utilities and the Gorgon joint venturers for domestic gas yesterday. (1) The energy minister has today conceded that “there will be upwards pressure in terms of prices”. To what extend will these increases impact on families? (2) When will this upward pressure be felt by families? (3) In a speech to the Baker Institute in April 2010, the Premier said — It is not an acceptable situation to have domestic gas prices well above world prices … Can the Premier confirm for the community that, in this deal, prices are not “well above world prices”? Mr C.J. BARNETT
I refer to the signing of contracts between utilities and the Gorgon joint venturers for domestic gas yesterday. (1) The energy minister has today conceded that “there will be upwards pressure in terms of prices”. To what extend will these increases impact on families? (2) When will this upward pressure be felt by families? (3) In a speech to the Baker Institute in April 2010, the Premier said — It is not an acceptable situation to have domestic gas prices well above world prices … Can the Premier confirm for the community that, in this deal, prices are not “well above world prices”? Mr C.J. BARNETT
AnswerView source ↗
(1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
(1) The energy minister has today conceded that “there will be upwards pressure in terms of prices”. To what extend will these increases impact on families? (2) When will this upward pressure be felt by families? (3) In a speech to the Baker Institute in April 2010, the Premier said — It is not an acceptable situation to have domestic gas prices well above world prices … Can the Premier confirm for the community that, in this deal, prices are not “well above world prices”? Mr C.J. BARNETT replied: (1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
(2) When will this upward pressure be felt by families? (3) In a speech to the Baker Institute in April 2010, the Premier said — It is not an acceptable situation to have domestic gas prices well above world prices … Can the Premier confirm for the community that, in this deal, prices are not “well above world prices”? Mr C.J. BARNETT replied: (1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
(3) In a speech to the Baker Institute in April 2010, the Premier said — It is not an acceptable situation to have domestic gas prices well above world prices … Can the Premier confirm for the community that, in this deal, prices are not “well above world prices”? Mr C.J. BARNETT replied: (1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
(1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
(1) The energy minister has today conceded that “there will be upwards pressure in terms of prices”. To what extend will these increases impact on families? (2) When will this upward pressure be felt by families? (3) In a speech to the Baker Institute in April 2010, the Premier said — It is not an acceptable situation to have domestic gas prices well above world prices … Can the Premier confirm for the community that, in this deal, prices are not “well above world prices”? Mr C.J. BARNETT replied: (1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
(2) When will this upward pressure be felt by families? (3) In a speech to the Baker Institute in April 2010, the Premier said — It is not an acceptable situation to have domestic gas prices well above world prices … Can the Premier confirm for the community that, in this deal, prices are not “well above world prices”? Mr C.J. BARNETT replied: (1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
(3) In a speech to the Baker Institute in April 2010, the Premier said — It is not an acceptable situation to have domestic gas prices well above world prices … Can the Premier confirm for the community that, in this deal, prices are not “well above world prices”? Mr C.J. BARNETT replied: (1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
(1)–(3) The signing of, I think, 125 terajoules a day of gas supply from 2015 for 20 years is, in the current circumstances, a good arrangement that has been reached between Verve Energy, Synergy and the Gorgon supplier. Most importantly, it gives security of gas supply and, yes, although it is at a price significantly above the existing North West Shelf contract, it is nevertheless not the highest price that gas has been sold at, by any means, within the state, and is closer to an export-parity price. Ultimately, I am optimistic about gas supply into this state because we have both large offshore and increasing evidence of significant onshore gas reserves as well. The Gorgon project, the Macedon project and Wheatstone, which will start construction with a groundbreaking ceremony tomorrow, have domestic gas obligations, and even the Browse project will fit that category. I expect that from a variety of sources already in construction or likely to go into construction, we will see increasing supply of gas into the domestic market and increasing competition and that will hopefully force down prices. But let me say, in Western Australia, Australia and internationally, we live in an environment of rising energy prices, including for natural gas. Natural gas is very much becoming the preferred energy source, particularly in the Asia–Pacific region after the Fukushima nuclear accident. After greenhouse policy has been employed and with less desire to use coal, natural gas demand will probably increase by two or three times over the next 20 years. That will be the environment and I will get to the member’s point — Mrs M.H. Roberts : Are you disagreeing with the energy minister’s comment? Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
Mr C.J. BARNETT : No, no; I am saying that the price of gas from 2015 on is above the price of gas for the major contract now, and, yes, by definition, it must add some upward pressure on prices. But bear in mind, the price of gas is only one component of the gas delivered to a business or to a household. It is only one contract in a series of overlapping energy utility contracts—some at lower prices, some at higher prices—and then we also have coal prices. Therefore, the average will fall out and there will be upward pressure, but I do not believe that that will prove to be an excessive upward pressure, and as that increases, hopefully we can keep future contracts at that or even below that. That is a challenge, but it is a challenge through which we will at least have energy supply security, and that is the most important thing. Although people, quite understandably, will find financial pressure of higher prices, the most important thing is to have security of gas supply. There has been a lot of debate over the past year about doubts about gas supply. The signing of this contract ensures long-term supply of gas to the households and businesses of this state and I think that is a good outcome.
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