Australia’s Energy Consumption Gushes; While ACCC Nods in Consent for Liberty’s Acquisition by Viva

Australia’s energy consumption is on a surge from over a decade amid its improving energy productivity (GDP/ energy consumption) and energy intensity (energy consumption/ GDP). Fossil fuels which capture a substantial sum in the global energy generation represented 82.9 per cent of the total energy generation in Australia in 2017-18, when Australia generated record-261,140 Gwh of energy.

Also Read: Fossil Fuel Demand Turns All Eye’s On WHC, WPL, And WOR

The Australian economy witnessed a 2.8 per cent surge in 2017-18 to reach $1.8 trillion with a population growth of 1.6 per cent to stand at 25.0 million during the same period, and with a rise in the domestic growth and consumers the energy consumption surged to surpass the average growth rate of 0.6 per cent for a decade.

Australia’s energy consumption underpinned the growth of 0.9 per cent in 2017-18 to stand at 6,172 petajoules against pcp. The energy productivity improved by 2.0 per cent in 2017-18 against pcp and 20 per cent over the past ten years. Australia stationed itself to produce $294 million in GDP in exchange for every petajoule of the energy consumption during 2017-18.

The higher growth in energy consumption was propelled by the mining sector, which witnessed a growth of 9 per cent in 2017-18 against previous corresponding period (or pcp) amid increased natural gas and electricity consumption to support the LNG exports.

To Know More, Do Read: Australia Set to Surpass Qatar Over LNG Exports; Domestic Natural Gas Conditions To Derail the Projections?

Oil accounted for the largest share for the primary energy mix by standing at 39 per cent for the period of 2017-18, followed by coal at 30 per cent and natural gas by 25 per cent, while renewable energy sources captured 6 per cent of the energy generation.

Australia Electricity Generation

Australia’s total electricity generation stood at 261twh or 940 petajoules for the period 2017-18, including industrial, rooftop solar PV and off-grid generation.

The share of brown coal in energy generation fell by 17 per cent in 2017-18 against pcp, while that of black coal rose by 3 per cent during the same period.

The electricity generation from Natural gas surged by 7 per cent in 2017-18 against pcp; however, the natural gas-fired electricity generation witnesses a fall to stand at 19 per cent in the calendar year 2018.

Renewable electricity generation soared by 10 per cent in 2017-18 against pcp and also witnessed a growth in the calendar year 2018 to account for 19 per cent of the total energy generation.

Australian Energy Trade

Energy products export witnessed a growth of 4 per cent in 2017-18 against pcp to stand at 14,739 petajoules, while LNG exports grew by 18 per cent to stand at 3,376 petajoules. The export of black coal and crude oil witnessed an increase of 1 per cent & 2 per cent against pcp, respectively.

The uranium exports soared by 15 per cent in 2017-18 against pcp to stand at 8,118 tonnes.

However, despite being a substantial exporter of raw materials catering to the power generation, Australia imported 2,454 petajoules of energy, which underpinned the growth of 6 per cent in 2017-18 against pcp. The refined petroleum products and crude oil topped the imports list, and about 60 per cent of the refined product consumption in Australia was met by imports.

Despite such high energy generation, the ASX-listed energy stocks are tumbling in Australia amid weaker petroleum product prices over the falling crude oil and safety net provided by the Australian Energy Regulator in the name of Default Market Offer, which caps the price an energy retailer can charge for the electricity provided to the households and small businesses in Australia.

S&P/ ASX 200 Energy Index

The S&P/ ASX 200 Energy Index tumbled over the falling crude oil prices, which acts as the reference price for other energy and chemical liquids. The index recently plunged from the level of 11,202.80 (Day’s high on 16 September 2019) to the level of 10,284.50 (Day’s low on 03 October 2019, which in turn, marked a downfall of over 8 per cent.

Latest With ASX-Listed Energy players

The domestic and foreign energy retailers are deeply hit by the new DMO in Australia, and while the Hong Kong-based CLP Group faced headwinds previously when its wholly-owned EnergyAustralia retailing arm lost HKD 6.38 billion due to the new re-regulations, the domestic player AGL Energy Limited (ASX: AGL) also witnessed a fall amid the same reason.

To Know More, Do Read: ACCC’s DMO Hits Another Energy Retailer-AGL Nosedives Despite Positive FY2019

The Australian Competition & Consumer Commission, which regulates the retail energy market increased competition in the wholesale supply of fuel products via its new DMO, agreed in consent over the proposed acquisition of Liberty Oil by Viva Energy Group Limited (ASX: VEA).

Viva Energy Group Limited (ASX: VEA)

Viva notified the market participants over the ACCC’s stance to not oppose the proposed acquisition of the remaining 50 per cent interest in Liberty Oil Holdings Pty Ltd.’s wholesale business by the company as the energy market regulator assessed that the proposed acquisition is unlikely to lessen competition in the wholesale supply of fuel products substantially.

The energy retailers notified the ACCC about the alternative wholesale suppliers and brands they could switch to, which in turn, prompted ACCC to reach a conclusion.

ACCC Commissioner- Stephen Ridgeway mentioned, that post the acquisition, the threat of fuel retailers turning towards the alternative supplier would constrain VEA’s wholesale prices and supply terms.

ACCC considered the effect of the proposed acquisition over the wholesale market in Adelaide and Melbourne along with other local areas.

In metropolitan Adelaide, most Liberty Oil Holdings Pty Ltd.’s sites are dealer sites, where the company does not set the price, and the branded sites are low with other retailers such as United and X Convenience offering competition; thus, price increases from the proposed acquisition by Viva are unlikely.

In metropolitan Melbourne, Liberty Oil Holdings Pty Ltd has a very small share of retail sites, which diminishes the impact of the proposed acquisition.

The local sites, where the retail chain of both the company overlaps have sufficient competition to check on the price increase.

Thus, post analysing and finding the above-mentioned reasons, ACCC agreed to express no opposition over the proposed acquisition between Viva and Liberty Oil Holdings Pty Ltd.

Viva Energy Limited last traded at $1.870 on ASX, up by 4.76 per cent from its previous close (as on 11 October 2019, AEST: 4:40 PM).

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