Gas price stability a pipe dream

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    Gas price stability a pipe dream

    UNCOMPETITIVE investment incentives threaten to send Australian gas prices higher.

    The country's peak oil and gas group yesterday warned that Australians were fooling themselves if they assumed sufficient gas would always be available on demand at current prices.
    Australian Petroleum Production and Exploration Association chairman Agu Kantsler said further exploration and development of new gas fields in south-east Australia could result in a "significant increase in prices" if companies were to make their investments pay.

    "The high cost of developing gas projects offshore and getting this gas to shore at a competitive price is proving to be major obstacle to diversification of supply," Dr Kantsler told APPEA's annual conference in Adelaide.

    Ultimately, gas might have to be piped long distances from as far away as Papua New Guinea he said.

    "This will entail having a gas price that allows developers a sufficient margin to continue to invest," Dr Kantsler said.

    APPEA has long argued for more attractive incentives as part of an integrated national energy policy to encourage offshore activity.

    "To date, most attention has been focused on market reforms based on an assumption that gas supply will always satisfy demand growth without significant increase in prices," Dr Kantsler said.

    "Where that gas will come from in future and at what price it can be delivered is seldom, if ever, discussed.

    "This is a bold assumption.

    "Australia is already facing a challenge to attract major offshore players, given more attractive destinations elsewhere.

    "Australia is a high cost and relatively high technical risk investment destination, which is why so few of the majors and supermajors invest here," Dr Kantsler said.

    "Those that do seldom venture beyond their core production acreage."

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