Gas code benefits questioned as sellers and buyers gripe

afr.com:

Less than 7 per cent of gas sold on the east coast may be subject to the Albanese government’s price caps, meaning the much-vaunted policy may do little to rein in prices for consumers despite having already done irreversible damage to investment confidence.

The calculation from Credit Suisse analysts comes ahead of the release expected as early as Thursday of the text of Labor’s mandatory Code of Conduct on gas, which will include the rules on exemptions to the wholesale price cap of $12 a gigajoule.

The rules are eagerly awaited by domestic gas producers such as Senex Energy, controlled by Korean steel giant Posco, which put its $1 billion Atlas project in Queensland on ice when the price controls were introduced last December. Major retailers AGL Energy and EnergyAustralia and manufacturer Orora have signed up to buy gas from Atlas, but the project won’t be revived if the rules don’t work, Senex CEO Ian Davies says.

The government claims the caps on gas and coal have reduced price increases in electricity and gas for households and businesses, with the competition watchdog noting that contract prices offered by producers for 2024 had fallen to just over $12/GJ by the end of 2022 after peaking at almost $50 a gigajoule last August.

But others say the big drop in international gas prices means wholesale prices would have been lower in any case and question whether the caps have provided any extra benefit.

“Given that international prices have also fallen significantly, it can be argued that a large part of these reductions may have happened anyway,” consultancy EnergyQuest said.

North Asian spot LNG prices have slumped from about $US70 per unit last August to about $US12 now.

“The intervention has also incurred the