Disbelieving is not being negative

Published in Hunter Business Review September 2019

Spin doctoring is a modern art of media management that often makes my blood boil, and I sometimes use this column to try and cut through the treacle. It’s also, for this reason, some members of the Newcastle business community ask me why some of my articles take the odd negative turn.

Let’s start with the Gas Terminal planned for Newcastle Harbour. The spin is that the terminal will help provide energy security for NSW and the nation. To my way of thinking, this facility seems to be a toll gate that will only serve to further clip the ticket on the price of Aussie gas molecules on the way through the hands of its owner Jee Yoon. Mr Yoon is the founder and managing director of South Korea Energy Projects and of Infrastructure Korea (EPIK). Both focused on developing floating LNG regasification projects in regions with high natural gas demand.

The gas comes from the Australian outback and is piped through to the Gladstone Gas Terminal. This facility has several owners, including Santos that has a 30% stake, along with Malaysian government-owned Petronas (27.5%) and Korean gas monopoly KoGAS (15%). The gas is cooled to -160 deg Celsius in Gladstone and liquified ready for export. A recent opinion piece “Aussie LNG circus goes completely mad” first published in the Australian Financial Review and posted on investment website Macrobusiness, said, “Presumably Mr Yoon’s business model is [to] toll the volumes passing through his regasification terminal. If we’re stupid enough to let it go ahead, then it’s not a bad idea for him.”

The article continued, “Except, of course, if you are going to let one single gas trader take all of the gas. That then adds another middleman clipping the ticket on the Australian gas molecule round trip circus:

  • mined in QLD, SA or VIC for $1.00/Gj
  • piped to QLD and frozen for $7.00/Gj
  • shipped out to the Coral Sea;
  • u-turns and sails instead to Newcastle;
  • regasified and piped to QLD, NSW, SA or VIC for $2.00/Gj.

Viola! $1.00/Gj gas is presented for use to Aussie households and business for $10.00/Gj.

Unless, of course, it is all bought by the very same cartel that owns steps 1-4, Shell or Total, for instance. Then the same gas might just do the entire round trip again and $1.00/Gj becomes $20.00/Gj, $30.00/Gj, $40.00/Gj and on it goes until the sad little gas molecule evaporates through the lonely, dark aperture of some leaking pipe or holed LNG shipping bladder, never to be used but most certainly mercilessly abused.

“It’s the kind of rehypothecation that a bankster could only dream of.”

” I’m not making this up, and now we have some idea about why our household gas is 2.5 times more expensive than South Korea”.

Post written by Steve Dick
0425 302 771
steve@rhplus.com.au

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