Australia secures new gas deals for east coast energy markets
(Reuters) - The Australian government said it had reached new gas supply deals for its east coast energy market, easing some concerns over long-term supply gaps as the country moves rapidly away from its dependence on coal-fired power stations.
More than 260 petajoules of gas will be supplied through 2033 in two new enforceable commitments with Exxon Mobil's, opens new tab Esso unit and Woodside, opens new tab under the government's gas code rules, Energy Minister Chris Bowen said.
Australia last year extended a price cap of $8 per gigajoule on natural gas until at least mid-2025, but it relaxed the rule for big producers if they agreed on domestic supply commitments for the country's east.
"Gas is critical to supporting a lower-cost, more renewable grid as aging coal exits, and to support Australian manufacturing," Bowen said in a statement.
The supply deals, sufficient to power east-coast gas-fired power stations for around two-and-a-half years, will directly feed into stations previously identified as being at particular risk of seasonal shortfalls, Bowen said. This will ensure enough domestic supply to keep downward pressure on prices, he said.
Australia's energy market operator in March said the country faced risks of long-term supply gaps and must require additional commitments to expand its domestic gas supply.
Though Australia produces more gas than it needs to meet its domestic demands, most supply is contracted for exports.
The Labor government targets 82% of power to be supplied from renewable sources by 2030 and considers gas a critical element in the transition to cleaner energy.
The latest commitments follow deals reached in November 2023 with Australia Pacific LNG (APLNG) and Senex Energy, controlled by South Korea's Posco International (047050.KS), opens new tab, to supply up to 300 PJ of gas to 2030. APLNG is a joint venture between ConocoPhillips, Origin Energy, and Sinopec.
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