The ACCC has today begun publishing oil-linked LNG netback prices on its website. This follows the ACCC’s review of its LNG netback price series in 2021, in which we decided to continue publishing short-term export parity prices for two years ahead based on Asian LNG spot prices, and to extend forward LNG netback prices out to five years based on international oil-linked LNG prices.
The LNG netback price series improves transparency in the east coast gas market. It helps to reduce bargaining power imbalances by giving commercial and industrial (C&I) gas users the same information that gas suppliers use when deciding what prices to offer to the domestic gas market. Since they were first published in 2018, short-term LNG netback prices have provided a useful benchmark for gas suppliers and C&I users negotiating domestic contracts for terms of up to two years. The addition of five-year forward prices will help facilitate negotiations of longer-term contracts.
The east coast gas market is connected to international markets through the Queensland LNG export facilities. International LNG prices influence Australian gas prices because domestic suppliers have the option of selling gas to international LNG buyers, predominantly in Asia. The ACCC’s short-term LNG netback prices represent what east coast LNG producers could expect to receive for uncontracted gas sold into Asian LNG spot markets, while oil-linked LNG netback prices represent what may be received under LNG contracts of up to five years ahead.
The ACCC will continue to monitor developments that may influence the relevance of LNG prices to the domestic market, including the capacity of the Queensland LNG facilities, structural changes in global LNG markets, and the domestic regulatory environment. The ACCC will conduct another formal review of the netback price series no later than 2024 to ensure the methodology remains appropriate.
Further details about the publication are available at: LNG netback price series review.