ANZ senior commodity strategist and author of the 70-page report, Daniel Hynes, says while the bank expects “natural” market dynamics to someday incentivise producers to cater the domestic market, Australian consumers are undoubtedly going to see a rise in their bills in the coming years.
“Domestic prices here are low compared to what is on offer internationally,” Mr Hynes told Gas Today. “And until we see a shift in those domestic prices, producers are obviously going to shift their focus to the export market. At the moment LNG production costs are certainly higher than what domestic prices have been sitting at.”
The bank listed the chemicals and metals manufacturing sectors as being the two hardest hit by a potential price increase and urged those industries to be proactive in installing cost-saving mechanisms to prepare for the presumed price hike.
Without prompt mitigation strategies, those industries could see profitability fall by a fifth and return on equity halved, the bank warned.
“In general, this is going to be an evolving shift that could potentially be mitigated with prudent strategies,” Mr Hynes says. “And in the shorter term it is going to be a concern of forced diversification of energy resources.”
Citing the ANZ report, the Australian Workers Union (AWU) called on the federal government to step in and cap LNG exports amid concerns the gas price increase would lead to job losses.