The ACCC publishes the LNG netback price series as one of the measures to improve transparency of gas prices in the east coast gas market. In establishing the Gas Inquiry, the Australian Government directed the ACCC to provide information to the market as appropriate.
An LNG netback price is a measure of an export parity price that a gas supplier can expect to receive for exporting its gas. It is calculated by taking the price that could be received for LNG and subtracting or ‘netting back’ the costs incurred by the supplier to convert the gas to LNG and ship it to the destination port.
LNG netback prices based on Asian LNG spot prices currently play an important role in influencing gas prices in the east coast gas market.
An LNG netback price is not the sole factor that influences domestic prices in the east coast gas market. Individual prices paid by gas users will also reflect other factors that may be relevant to their circumstances, including the terms and conditions of their gas supply and any applicable transportation or retailer charges.
When adjusted for these factors, an LNG netback price represents the price that a gas supplier would expect to receive from a domestic gas buyer to be indifferent between selling the gas to the domestic buyer and exporting it.
The LNG netback price series includes:
- historical monthly LNG netback prices at the Wallumbilla Gas Supply Hub (Wallumbilla) in Queensland, dating back to January 2016 based on a measure of historical Asian LNG spot prices, and
- forward monthly LNG netback prices at Wallumbilla, extending to at least the end of the following calendar year, based on a measure of expectations of future Asian LNG spot prices.
Historical LNG netback prices will be updated on this page once a month, and forward LNG netback prices will be updated twice a month.
The prices shown are for information only and do not represent the ACCC:
- setting a level of gas prices in the east coast gas market or any other market in Australia
- forecasting international or domestic gas prices
- forecasting any of the inputs used in the calculation of the LNG netback prices, or
- providing an endorsement of the price reporting agencies or the specific methods adopted by those agencies.
LNG netback price chart
The chart below displays historical and forward LNG netback prices. Annual simple average forward prices are displayed only for each complete calendar year.
|Cargo delivery month / futures contract month||Historical netback prices||Forward prices at 13 November 2020|
Last updated on 16 November 2020. Next update on 1 December 2020.
Note: the ACCC has published the LNG netback price series and accompanying information to provide general information only. It should not be regarded as financial or other professional advice. The series, prices and accompanying information are subject to the limitations as stated on this web page and in the ACCC’s Guide to the LNG netback price series.
Users of the LNG netback price series or the accompanying information should consider whether the method, inputs and assumptions used by the ACCC are appropriate for their circumstances. Users should also seek professional advice appropriate to their circumstances.
The ACCC shall not be liable for any loss or damage arising from any person’s reliance on or use of this series or any part of the series or the accompanying information.
- Historical LNG and freight prices: S&P Global Platts (Platts data © 2018 by S&P Global Platts, a division of S&P Global Inc. All rights reserved)
- LNG futures prices: Intercontinental Exchange
- Forward LNG freight prices: Argus Media Ltd.
How to use the LNG netback price series
The average of forward LNG netback prices over a given period of future gas supply can be used by gas buyers in negotiations with suppliers as an indicator of a domestic supplier’s opportunity cost of supplying the East Coast Gas Market at Wallumbilla.
For example, if a user was seeking gas supply over the next full calendar year, the LNG netback price series would allow them to determine the average of forward LNG netback prices over that year at Wallumbilla. The user would then be able to use this average to assess price offers made by domestic suppliers for that same period of supply (noting that other factors may be relevant, such as the terms on which the gas will be supplied, transportation costs and any applicable retailer charges).
The ACCC has sought to make its method for calculating forward LNG netback prices (including the inputs used) as transparent as possible so that users of the price series have the option of substituting the ACCC’s inputs and assumptions with their own alternatives, and thereby determining alternative LNG netback prices.
Below are some practical tips that may be useful to users in making such adjustments. To make any adjustments, we recommend that users download the most recent version of the LNG netback price series Excel spreadsheet (below).
- In the LNG netback price series spreadsheet, users are able to replace any of the inputs and assumptions with alternatives. This includes forward LNG prices, LNG freight costs, exchange rates, LNG plant operating costs and fuel gas, and pipeline transportation costs. The effect of any changes will flow through to the final calculation of LNG netback prices at Wallumbilla.
- For a given period of gas supply within the forward LNG netback price time horizon (that is, the end of the following calendar year), individual LNG netback prices for each month of the supply period can be averaged to determine a domestic supplier’s opportunity cost of supplying the East Coast Gas Market at Wallumbilla over that period. As noted above, this can be used by gas buyers in negotiations with suppliers to assess price offers made by suppliers for that same period of supply (noting that other factors such as transportation, GSA flexibility and retailer costs and margins may be relevant).
- While the forward period for the price series by default ends at the end of the following calendar year, users are able to extend this. The Intercontinental Exchange quotes JKM futures prices beyond this, so users are able to use these as measures of forward LNG prices (noting that liquidity in the JKM futures market is currently relatively limited beyond a period of around 6 months). Users may also substitute these extended measures of forward LNG prices for alternative measures, such as forecasts by commodity price reporting agencies or industry analysts.
For more information see the ACCC’s Guide to the LNG netback price series (link below).
The ACCC has published a guide that outlines the ACCC’s method for calculating the prices in the series and how the series can be used in practice.
The ACCC also publishes a spreadsheet (updated with each update to the price series) that shows the prices underlying the price series, including a step-by-step calculation of forward LNG netback prices.
The ACCC has published a report, commissioned by the ACCC from Core Energy, which includes estimates of gas production costs for proved and probable reserves in the east coast gas market (including reserves not currently in production) as at 31 December 2017.
The ACCC publishes transportation prices, which can be used in conjunction with the LNG netback price series to estimate an indicative reference price of gas in locations other than Wallumbilla.
The ACCC welcomes feedback on the LNG netback price series and the accompanying guide. Comments can be made in writing to firstname.lastname@example.org
Users acknowledge and agree that Platts, its affiliates, or its licensors own the Platts Material used in the ACCC’s calculation of LNG netback prices, and all intellectual property rights therein, including, without limitation, any patent, trade secret, copyright, and trademark rights (whether or not such rights are registered).
Platts, its affiliates, and their respective third party licensors disclaim any and all warranties and representations, express or implied, including any warranties of merchantability or fitness for a particular purpose or use with respect to the Platts material, including any information or data contained therein or the results obtained by their use or the performance thereof. None of Platts, its affiliates, or their respective third party licensors guarantees the adequacy, accuracy, timeliness or completeness of the Platts material or any component thereof or of any communications with respect thereto. None of Platts, its affiliates or their respective third party licensors shall be subject to any damages or liability for any errors, omissions, interruptions, or delays in the Platts material. The Platts material and all components thereof are provided on an 'as is' basis and ACCC website users’ use of the Platts material is at their own risk.
Notwithstanding anything to the contrary, in no event whatsoever shall Platts, its affiliates or their respective third party licensors be liable for any indirect, special, incidental, punitive or consequential damages, including but not limited to, loss of profits, trading loss, lost time or goodwill, even if they have been advised of the possibility of such damages, whether in contract, tort (including negligence), strict liability or otherwise. None of Platts, its affiliates or their respective third party licensors shall be liable for any claims against ACCC website users by third parties.
Argus Media Ltd is the source of the confidential proprietary LNG forward freight cost estimates which the ACCC has republished on this web page. The ACCC obtains this data from Argus under licence. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of its data or the ACCC’s presentation of that data, or its fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party’s reliance on Argus’ data, and disclaims any and all liability related to or arising out of use of the data to the full extent permissible by law.