Santos’s $3.6b gas field approval stokes price hopes for factories

Source: The Sydney Morning Herald

1st October 2020

Some of Australia’s top manufacturers say the approval of Santos’s contentious $3.6 billion Narrabri gas field is a key step in the push to avoid a supply crunch and start easing stubbornly high prices in the nation’s south-east.

Large gas users such as manufacturers, which have been struggling under the pressure of tripling gas contract prices in recent years, said increasing supply close to the country’s demand centres in Victoria and NSW was urgently needed.

But chief executive Alberto Calderon stressed that the supply increase must translate to sustainable pricing “if Australia’s manufacturing base is to remain competitive”.

Some gas wholesalers that have committed to buying Narrabri gas, said although COVID-19 has slashed spot-market gas prices in the short term, more local supply would shield businesses from volatility and ensure lower, longer-term contracts.

“More supply means lower prices, at the moment, gas prices are low, but that’s because of COVID. They won’t stay low … eventually they will go up. This will stop them from going back up to ridiculous levels.”

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