Price is the elephant in Australia’s LNG, domestic gas conundrum: Russell

Price is the elephant in Australia’s LNG, domestic gas conundrum: Russell

(The opinions expressed here are those of the author, a columnist for Reuters.)

LAUNCESTON, Australia - Australia's threat to curb exports of liquefied natural gas (LNG) in order to ensure domestic supplies is another unwelcome pressure on a tight global market for the super-chilled fuel.

But it's not an immediate threat, and it may also not materialise at all, depending on how the various players in Australia react to the government's planned action.

What needs to be addressed effectively is the elephant in the room, namely the price at which natural gas is made available to domestic consumers relative to the price the gas companies can receive for their LNG on the global market.

Australia vies with the United States and Qatar as the largest exporter of LNG, so the problem is not that there isn't enough natural gas in the country.

The issue is simply that the gas companies, no matter what public relations spin they may put on it, want to sell their fuel at the highest possible price.

If domestic consumers are prepared to pay the equivalent of international LNG prices, it's likely that the gas companies would be fairly agnostic as to who they sell to.

The problem is that domestic buyers will