When the Strait of Hormuz closed, global gas prices doubled seemingly overnight. As one of the world’s biggest gas exporters, the spike should have meant a big payday for Australia.  Unfortunately, it hasn’t played out like that because Australia has a habit of locking in energy deals that look increasingly out of step with reality. Case in point: our long-term gas agreements with Japan.

In an extremely volatile market, Australia continues to ship gas offshore at low, fixed rates, while Japan on-sells it at a profit. As domestic prices rise and supply tightens, the consequences of this not-so-great deal are landing at home. So how did one of the world’s largest gas exporters end up with so little flexibility?

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