Specialist
Former Manager at ATCO Australia
Agenda
- Impact of reservation policy on domestic gas price
- Regional gas consumption patterns
- Gas pipeline asset quality
- CAPEX profile for gas pipelines
Questions
1.
Could you explain the structure of the Australian midstream market between the transmission and distribution?
2.
There is a gas reservation policy in Western Australia already, which will potentially expand to cover the whole of Australia. What would be the impact if it is introduced to the whole of Australia?
3.
How does the gas reservation policy impact Western Australia? Would you expect it to be the same impact if the gas reservation policy is implemented in eastern Australia?
4.
At least 15% of gas produced in Western Australia is reserved for the domestic supply, but what is this proportion in the eastern side?
5.
Western Australia has already imposed the 15% restrictions. Do you think the policy is effective in controlling the gas supply for domestic in Western Australia?
6.
Is there any impact to margins or volumes for the midstream companies due to the pipelines to the domestic market?
7.
Could you elaborate on the demand difference between the two regions and its causes?
8.
You mentioned the midstream in the east coast is more sensitive to gas price. Might there be some margin pressures or volume decline in the pipelines?
9.
How are the tariffs trending now? Are there any foreseeable changes for future regulations or gas prices?
10.
Could you estimate the tariff range for the useful lifecycle of a pipeline and how does it trend?
11.
What is the minimum IRR needed on a new pipeline for a 10- to 15-year agreement to build a pipeline or have the contract with the customers?
12.
What increase or decrease to gas price do you think the restriction policy on domestic supply will cause?
13.
Could you estimate typical gas consumption for the domestic supply? What is the volume growth and how is it used?
14.
One of the catalysts is to decrease the electricity price in Australia. What proportion of electricity generated uses gas?
15.
What growth do you expect in Western Australia and eastern Australia?
16.
Could you outline the key players in the Australian midstream and their relative competitive positioning?
17.
How do downstream players choose which upstream players to buy gas from? How do they choose the pipeline to transmit the gas to the distribution centre and to the end users?
18.
You mentioned there is a natural monopoly. Which pipelines are more favoured by the upstream players? Is it those with a higher margin?
19.
Do distribution pipelines or transmission pipelines have the highest transportation volume of gas in Australia for the west coast and east coast?
20.
If there is a natural monopoly with pipelines, how does competition work for constructing a new pipeline and how would the government review pipeline construction?
21.
There is still a pipeline to the middle of Australia in Darwin and a transmission pipeline to the eastern coast. Does it decrease the price of the gas because of the higher volume, or what is the underlying reason to want to connect the middle of Australia to the east coast?
22.
Could you break down pricing across each region?
23.
Do you think there any chance that the western side will also connect with the eastern side for the pipelines?
24.
Are there any more opportunities for significant pipelines to be built in the near future?
25.
After the government builds the pipelines and wants to sell it to the private companies, how will the government choose which company to sell to?
26.
How would the midstream companies get the land approvals, and how long does it take them to build a gas pipeline from the outset to a finished product?
27.
What is the asset quality of existing pipelines?
28.
What is the typical useful life for these existing pipelines and how much is it depreciated through the years?
29.
What is the difference between a pipeline with useful life of 20-30 years and 60 years? Is there any significant difference in asset quality across the players?
30.
What CAPEX is required for building a pipeline per kilometre?
31.
What maintenance CAPEX is required for the pipelines? Do older pipelines such as for APA have a higher maintenance CAPEX to maintain the quality of gas transportation?
32.
You suggested the maintenance OPEX tends to be steady at 1.25% of the capital cost, but there are some old pipelines for APA. Why is there a steady rate of maintenance OPEX even for these pipelines?
33.
Could you outline the margins across the key players? Is there any foreseeable margin shift or pressure for the mainstream companies?
34.
How does the government decide whether it is a regulated pipeline or an unregulated pipeline?
35.
Are there only one or two gas pipeline companies in a city? How do discussions go with the metro cities or the federal governments to construct the distribution pipeline in the city?
36.
How is the finance cost trending to maintain this pipeline quality?
37.
What are typical ranges of financial cost, and are there any future challenges that might result in a higher financing cost for building or maintaining pipelines?
38.
Do you think the entire industry will exhibit higher growth in the future, or will it become stable as in the pipeline midstream companies?
39.
Are there any challenges or threats you think could harm the stability of the midstream companies in generating returns to the investors?
40.
Do you have any final remarks to share on the industry and regulation?
