Shell Agrees Gas Supply Deals in Australia
06 Aprile 2017 - 8:12AM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--Under pressure to ensure industry in
Australia isn't hit with a shortfall of natural gas, Royal Dutch
Shell PLC (RDSA) said it had agreed short-term sales deals with a
power supplier and a maker of explosives.
The energy company is reducing exports of gas from its QGC
operation in tropical Queensland in order to supply additional gas
to the domestic market this year, said Zoe Yujnovich, the recently
appointed chairwoman of Shell's Australian business.
The supply contracts add to sales agreements signed with power
generators and retailers, and bring total domestic sales from QGC
to about 11% of east-coast demand for 2017, Ms. Yujnovich said.
The company said it would supply about 8 petajoules of gas to
Engie SA's (ENGI.FR) Pelican Point power plant in South Australia
state for five months over the peak winter period, and had agreed
an 18-month deal to supply gas from Queensland's Surat Basin fields
to Orica Ltd.'s (ORI.AU) Yarwun explosives and cyanide
operation.
"Shell's business on the east coast has reacted to the gas
market," she said.
Amid warnings of a looming gas shortage in the southeast and
volatile power prices, Prime Minister Malcolm Turnbull last month
extracted a commitment from energy companies to supply enough gas
to meet local demand during peak periods and to work toward
increasing supplies longer term. At a meeting in Canberra with
company executives, the prime minister held out the prospect of
regulating exports or other measures if the industry wasn't able to
ensure adequate supply.
Days earlier, a report from the operator of the country's gas
and electricity markets projected a shortfall in gas-power
electricity generation in southeast states from as early as next
summer if no action was taken.
Shell's new supply deals come on the heels of an agreement last
week by Origin Energy Ltd. (ORG.AU) to supply gas to Engie's
Pelican Point plant over three years from July, and in return buy
electricity from the plant to supply to its own customers.
Worries about power supplies came to a head late last year when
South Australia was hit by several blackouts, including a statewide
outage after a violent storm that left many homes and businesses
without power for several days. The prospect of further blackouts
prompted Tesla Inc.'s Elon Musk to offer--initially via Twitter and
later during a phone calls with political leaders including Mr.
Turnbull-- his company's energy-storage technology as a solution to
the state's energy troubles.
Industry groups have for several years warned of rising prices
and risks to supply as major gas-export plants ramp up production
of liquefied natural gas. Three massive LNG plants on Curtis Island
in northeastern Queensland, operated by Shell, Origin and Santos
Ltd. (STO.AU), respectively, are tapping methane buried in inland
seams of coal and converting it to LNG for export to Asia.
The Shell and Origin-led ventures gave a commitment to Mr.
Turnbull to being net domestic gas suppliers and the third
operation said it would take the matter on notice.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
April 06, 2017 01:57 ET (05:57 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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