The head of energy giant Royal Dutch Shell’s new east coast energy trading business is expected to leave his role to return to the UK amid forecasts Australia’s domestic gas contract prices are set to rise significantly by the end of this year.
Shell Energy Australia vice-president Tom Summers is understood to be moving on from his position, which included oversight of Shell’s marketing and trading businesses within its gas and power unit, for a different stint within the global company.
An internal replacement is expected to be named in the coming weeks, according to source.
Shell’s trading business is focusing on providing gas to energy consumers including retailers and large industrial users as it considers ways to combine the fuel with renewable energy sources.
But it is the company’s potential push into the nation’s domestic retail electricity market that is being more closely watched by Australia’s power incumbents Origin Energy, AGL Energy and EnergyAustralia.
The three companies hold large retail market shares in many states and control more than 60 per cent of capacity in NSW, Victoria and South Australia against a backdrop of political infighting over high power prices.
Shell “looks forward to expanding our range of energy products as opportunities arise,” a Shell spokeswoman told The Australian yesterday. “Shell continues to focus on supplying natural gas to Australian retailers and large industrial users. As the cleanest-burning hydrocarbon, natural gas remains an essential component of Australia’s long-term energy mix and a natural partner to intermittent renewable energy sources.”
Despite a number of government actions to ensure more gas is available for supply on the east coast, prices are set to rise again this year, Credit Suisse says.
Yesterday, the broker warned that domestic gas contract prices could rise rapidly from a range of $8-$11 quoted by the ACCC last month to $13 or more.
The forecast rise is partly due to delays to Shell’s Prelude LNG project and Japan’s Ichthys LNG project, both off Western Australia, which are expected to worsen the seasonal LNG market tightening that comes with the northern winter.
“Prices could be headed into the teens as we approach Christmas and the LNG market tightens,” Credit Suisse analyst Saul Kavonic said.
“The seasonal uptick in LNG demand over the northern hemisphere winter is going to be exacerbated by delayed supply … especially because of delays at the two under-construction Australian projects, Prelude and Ichthys, which might not deliver much, or any, volume at all this year.”
In its July gas report, the Australian Competition & Consumer Commission said gas contracts entered into in the first quarter of 2018 were between $7.63 and $11 a gigajoule for 2019.
“Since June, LNG markets have strengthened further, suggesting prices for 2019 supply may be well into the low teens by now,” Mr Kavonic said. But he said producers could be keeping prices artificially low so as not to attract attention and threats of further market intervention heading into the coming federal election.
In its July report, the ACCC said Shell’s entry into the trading arena could be helping keep prices lower. “There is now more competition between the retailers and aggregators than there was in 2017,” the ACCC said.
Extracted from The Australian