Eastern Australian gas prices soften on low demand

SINGAPORE (ICIS)–Australian wholesale gas prices continued a downward trend since the first quarter of 2020, according to the latest quarterly report from the Australian Energy Market Operator (AEMO).

Quarterly average prices on Australia’s wholesale gas trading exchange Gas Supply Hub (GSH) in the second quarter dropped to the lowest level since fourth quarter of 2015. Meanwhile, quarterly average prices on Victoria’s Declared Wholesale Gas Market (DWGM) fell to lowest level since first quarter of 2016.

LOW GAS DEMAND

Gas demand in eastern Australia softened in the second quarter of this year because of fewer exports from the Santos-operated Gladstone LNG (GLNG) operations on Curtis Island and less power generation at gas-fired plants, the report showed.

The decline came despite increased gas demand from the residential, commercial, and industrial sectors amid colder-than-usual temperatures in Victoria.

AEMO attributed lower feedgas demand to Curtis Island to low global oil and gas prices. The report also noted maintenance activities at three plants over the period helped in the decrease.

Gas flows into the Curtis Island dropped to 317 petajoules (PJs) in second quarter of 2020, down by 2% year-on-year, AEMO showed.

The report noted there was lower demand for power generation from gas-fired plants over the period because of low-priced supplies of other fuel sources.

Gas demand from gas-fired power generation fell to 33PJs, down 11% year-on-year, AEMO data showed.