Eastern Australia’s gas supply outlook has improved, but there is still the prospect of a winter shortfall for southern states without piped supplies from Queensland or altered export contracts, the Australian Competition and Consumer Commission has said.
The ACCC’s March gas inquiry report found the outlook for 2023 had improved since January, with a projected gas shortfall of three petajoules for the year, down from the 30 petajoule shortfall forecast previously.
The improvement was because of an increase in production estimates and a reduction in the amount of uncontracted liquefied natural gas (LNG) that could be exported.
However New South Wales, South Australia, Victoria and Tasmania will need at least 26 petajoules of additional gas from Queensland or local storage to avert a shortfall between July and September, the report said.
A projected surplus of 18 petajoules across Australia in the final three months of 2023 could help meet demand, the ACCC chair, Gina Cass-Gottlieb, said.
“If gas supply is brought forward, for example through gas swaps, or if LNG producers commit further gas to the domestic market, supply should be sufficient to meet demand in the third quarter of 2023,” she said.
She encouraged gas producers to “consider this information and amend their plans to ensure domestic demand will be met each quarter”.
The competition watchdog last August flagged the prospects of an “alarming shortfall” of gas for this year, with demand expected to exceed supply by 56 petajoules, or the equivalent of about 10% of consumption.
Its warning was aimed at LNG exporters who were reaping record profits by shipping uncontracted gas to overseas customers desperate to diversify supplies after Russia invaded Ukraine.
The potential of domestic gas shortages in one of the world’s biggest gas exporters irked many energy users, large and small. The federal government imposed temporary domestic price caps on gas and black coal, and warned producers that it was reviewing other measures, including the introduction of “reasonable price tests” for new gasfields in a bid to lower energy costs.
According to the ACCC, gas producers are expected to have 91 petajoules of uncontracted gas in 2023, or 54 petajoules less than was forecast in January.
The drop was mainly primarily due to 45 petajoules of uncontracted gas being committed to additional sales and LNG spot cargoes, the ACCC said.
The LNG producers – dominated by three large, mostly foreign-owned consortiums – have also committed an additional five petajoules of gas to the domestic market.
But Cass-Gottlieb said risks remained for the sector, such as lower-than-forecast supplies from Victoria or the Northern Territory or higher-than-expected demand.
Gas shortfalls also remain a threat over the longer term, particularly after 2027, without expanded production, the ACCC said.
