Victorian Gas Market Update

01 May 2003Archived News Climate Change Matters

Read about the latest developments in the Victorian Gas Market and Energetics' comments on the news.


VicHub - Improvements in Gas Interconnection in Victoria

Natural gas will flow between Victoria, New South Wales and Tasmania for the first time, the Minister for Energy Industries and Resources, Theo Theophanous, announced on the 15th May 03. Mr Theophanous officially launched the interconnector joining Duke Energy's Tasmanian Gas pipeline and mainland Eastern Gas pipeline to GasNet's pipeline system at Longford.

"The 'VicHub' interconnector brings greater security of supply to Victoria and improved gas flows across the south-eastern Australian markets at a single point." "The new VicHub will add diversity and strengthen the security of Victoria's gas supply - particularly during the peak winter months," Mr Theophanous said.

"Greater diversity and choice of supply will result in improved outcomes for consumers." Mr Theophanous commented that the VicHub connection was an event of great significance and was a major advance in developing a truly national gas market.

"Ten years ago, Australia's gas markets were limited by state borders," he said. "With the installation of the VicHub, we have competition, choice and enhanced liquidity in the market.

"The VicHub will facilitate inter-regional trading between the physical and financial gas markets. The security of gas and electricity supply underpins Victoria's economic performance and drives our competitive advantage and growth," Mr Theophanous said.

He further added that the increase in gas exploration and the development of new infrastructure was contributing to the supply and delivery of gas at efficient and affordable prices.

(Media Release, Minister for Energy Industry & Resources, 15th May 03)

VicHub Commentary

New players in the Victorian gas market, such as the VicHub, won't necessarily add significant supply to the market, but will help to manage the financial risk.

The main supply is to be managed by Duke, the most likely player to compete with Esso BHP.

The VicHub will assist existing players and independent participants to hedge their risk in the wholesale market.

The VicHub will improve the interconnection of gas between NSW, Vic and SA.

Gascor Market Review

Wholesale gas prices to the three incumbent suppliers (TXU, AGL and Origin) were assessed in the recent Gascor Market Review.While the specific outcomes of the review are not publicly available, it is apparent that the impact was minimal, with any increase likely to have been in line with CPI, which also follows the trend from recent years.The next review is not due until 2006.

Other market developments

Other developments in the market that have presented opportunities for customers include:

  • Retailers' changing bidding strategies
  • The transition from a daily spot market settlement to hourly settlement leading to the possible introduction of time-of-day pricing
  • Increasing use of winter and non-winter pricing
  • The development of new gas reserves (e.g. the Ottway Basin)

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