Surge in east coast gas prices may be short lived

FORMER BHP Billiton petroleum chief Michael Yeager says even moderate gas prices on the east coast should generate ample supply for exports and domestic gas, raising hopes that a looming gas price surge will be short-lived.

Domestic gas consumers are bracing for higher prices as three LNG plants being built at Gladstone prepare to more than triple gas demand in the pipeline-connected eastern states.

Already, new gas supplies beyond 2015 are being quoted at up to $10 a gigajoule, more than double old contract prices of $3-$4.

But Mr Yeager, who spoke for 50 per cent of the big Bass Strait oil and gas assets that are the eastern states' biggest gas producer, said $5-$6 a gigajoule should be enough to generate new east coast supply.

If market forces played out as they should, this would mean prices eventually heading lower as new supply came on, as they did in the US.

Read the full story at The Australian.