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NSW gas buyer seeks govt intervention on Narrabri pipeline route

NSW gas buyer seeks govt intervention on Narrabri pipeline route

A group of NSW manufacturers has stepped up its efforts to ensure gas from Santos' $2 billion Narrabri project is kept within the state to supply struggling local buyers rather than sucked north for export through Gladstone.

Hunter Gas Pipeline, which is leading the group, has told the NSW Department of Planning that Santos' assurances that the gas would feed the NSW domestic market can't be relied on givenit failed in its previous claims that its GLNG venture in Queensland wouldn't draw gas from the domestic market.

Hunter Gas argues gas from the proposed Narrabri project should be sent in an already-approved $500 million pipeline proposed by Jemena that would take it to Newcastle, rather than inthe new Western Slopes line planned by APA Group in coordination with Santos.

Santos said it "has no plans" to send any of the gas from Narrabri via Jemena's proposed pipeline through through the Hunter Valley. A spokesman said the company had "always been clear" that gas from the project would be made available to the NSW domestic market.

But in a formal submission to the planning department on the Narrabri project, Hunter Gas managing director Garbis Simonian argues that the Narrabri proposals as they currently stand with the Western Slopes pipeline component "do not meet the public interest test".

The Western Slopes line would take gas from Narrabri and feed it into the Sydney-Moomba line, so open up broader options on markets for the gas, including Queensland, in theory.Santos says it would be "the most efficient and timely way to bring much-needed gas to the NSW domestic market".

'Use it or lose it'

Mr Simonian also urged the government to apply "use it or lose it" conditions on the Narrabri development project, citing the "urgent need for gas for NSW homes and businesses, together with the need for gas to underpin the electricity grid in times of high demand". Some 300,000 jobs in NSW are in gas-reliant manufacturing and could be at risk if supplies run short, he said.

Santos's controversial and long-delayed Narrabri project could supply up to half of the state's gas needs.

Hunter Gas signed an initial accord in early May with Jemena for the Chinese-controlled company to build and run the proposed $500 million pipeline from Narrabri to Newcastle, which already has development approval from the government.

The Jemena line is supported by other industrial gas users, including agribusiness player Manildra Group, packaging supplier Remapak, National Ceramic Industries and Mr Simonian's Weston Aluminium. A line to Newcastle would also solve a gas supply problem at the Colongra power plant on the Central Coast, Mr Simonian said.

Hunter Gas says in its submission that it believes local gas supply is "an essential test" of meeting the public interest requirements of the Narrabri project in the state government approvals process.

Santos eventually lodged its long-delayed environmental impact statement for the Narrabri venture in early February, triggering a renewed wave of opposition from environmental activists determined to block drilling or development of coal seam gas resources in the state.

The release of the mammoth 7000-page document came amid speculation whether Santos intends to retain the project in its portfolio after it included it in a carve-out in December of second-tier assets now run out of a separate division based in Sydney. Submissions on the EIS close on Monday.

Australia nears 'Argentinian moment'

South Australian senator Nick Xenephon claims Australia is nearing its own "Argentinian moment" saying failure to curb the high cost of gas will trigger tens of thousands of job losses, smash living standards and lead to "poverty and chaos".

Senator Xenophon likened the nation's current predicament to that of Argenina in the late 1800s when it was alongside Australia as two of the world's richest countries.

"Argentina then went down a path of bad strategic decisions, of bad policies and slid down a road of poverty and chaos.

If we don't deal with the gas crisis, Australia will see its living standards decline substantially, we will plunge us into very high levels of unemployment and scar our manufacturing sector on a long term basis."

Senator Xenophon said he was not overstating the seriousness of the situation, saying the cost of gas should be around $5 to $6 a gigajoule rather than the $20 a gigajoule cost many businesses now face.

"The feedback I'm getting from businesses all the time is that this energy crisis will turn into a national emergency unless we deal with this.

"I'm not overstating this. The fact is the price of gas in this country should be $5 to "Unless we tackle this head on and bring prices down to the $5 to $6 per gigajoule level we will literally be losing tens of thousands of jobs in this country in the coming 12 to 18 months," he told ABC's Insiders programe on Sunday.

Senator Xenophon said he was a stronger supporter of "use it, or lose it" measures to ensure gas companies don't hoard supplies to maintain higher prices.

Financial Review

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