We would like to address the inaccuracies in today’s Daily Telegraph about AGL’s gas contract with GLNG.
AGL is not making an ongoing decision to sell to GLNG, we are honouring a contract from 2015, which was announced publicly at the time. The fact is, AGL would profit more from not selling to GLNG but making the gas available to the Australian market.
The transaction with GLNG was made prior to the announcement of Hazelwood’s closure, which significantly increased the demand for gas for power generation. If advanced notice of Hazelwood’s closure was provided, this would have impacted AGL's decision to sell the gas to GLNG.
The transaction was also made when AGL planned to mothball units at its Torrens Island gas-fired power station. Following the sudden closure of the Northern Power Station, AGL agreed to keep Torrens running to help with system security in South Australia and therefore additional gas was required for power generation.
In addition, the degree of reduced gas production at BHP/Exxon's Longford facility, the main supplier to NSW and Victoria, has only just been publicly revealed in AEMO's ESOO report. Again this would have impacted AGL's view on selling gas to GLNG, had it been known publicly.
At the beginning of 2017, AGL was in a position where it no longer had adequate gas available to supply to its existing customers coming off contract. Rather than refuse to quote to those customers, AGL chose to provide prices where AGL had no gas to sell.
Since the Federal Government's intervention in the market, short term gas contracts have been made available and consequently AGL has reduced the price at which it quotes customers. In addition all customers who did not re-contract and went on to high default contracts have been actively contacted by AGL and have been offered new contracts reflecting the contract prices currently being offered by gas producers.
Clearly, if AGL had not sold the gas to GLNG, we would have been in a better position to service our customers. This is why AGL has consistently argued for advance notice of closure of power stations to minimise any potential impacts on customers.
AGL is doing what it can to increase gas and energy supply. We have contracted new supply from the Sole gas project operated by Cooper Energy, which will come to market in 2019 and we are continuing to source available new supply from the East Coast gas producers.
We are also working towards a final investment decision on our proposed $250 million project to import LNG at Crib Point in Victoria. This will potentially bring 100 petajoules a year of additional gas supply to Eastern Australia – enough to supply Victoria’s entire residential demand. This means more competitively priced gas, more competition and less reliance on a small number of existing, limited sources of supply.