Possible Gas Shortages in Southern States of Australia, Imports Expected by 2027 According to ACCC
The regulator warned that existing supply would decline, and new supply was lacking, leading to the Southern states needing to import gas within the next 2 years.
The Australian Competition and Consumer Commission (ACCC) has raised concerns about potential “structural shortages” in Australia’s southern states by 2027, possibly necessitating imports to meet demand.
Despite a projected surplus in domestic gas supply for 2025 and 2026, the ACCC anticipates an imbalance between supply and demand by 2027.
In light of the shortages, the ACCC indicated that the Southern states would need to rely on gas imports to fulfill demand beyond the near future.
However, the agency emphasized that importing gas was not a sustainable solution, emphasizing the importance of ongoing domestic gas production to ensure energy security and minimize risks associated with dependence on the international LNG market.
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The ACCC cautioned that imported LNG prices would surpass domestic gas prices, impacting gas supply negotiations and price transparency.
Why Are Gas Shortages Occurring?
While gas plays a crucial role in Australia’s transition to a net zero economy, the ACCC acknowledged a decline in gas supply in the east coast market.
The report highlighted, “Traditional gas sources like the Gippsland Basin, which have historically supplied the market at a low cost, are running low, and the lack of investment in new supply is not sufficient to replace them.”
It added, “Without new supply in the Southern states to bridge the gap, consumers will rely on gas transported from Queensland in the short term.”
“Due to limited southern pipeline capacity, the Southern states will likely turn to imported LNG for their gas needs,” the report explained.
Additionally, the transition from baseload coal generation to intermittent renewables in the National Energy Market has resulted in increased demand for gas-powered generation.
The ACCC projected that gas-powered generation would contribute to over 55 percent of annual gas demand on the east coast between 2027 and 2030.
Despite mounting pressure on the domestic gas market, Brakey noted several obstacles hindering new gas supply.
“Various factors such as regulatory hurdles, high initial costs, policy uncertainties, and lack of competition in the gas markets hamper the availability of new domestic gas supply,” she remarked.
Ways to Enhance Gas Supply
The ACCC recommended that the government streamline regulatory barriers to encourage timely investments in new gas supplies.
Furthermore, establishing clear guidelines on the role of gas in the energy transition would inspire confidence and attract investments.
“One approach to achieve this could be the development of a gas market system plan, akin to the Integrated System Plan for electricity, to identify and coordinate necessary gas investments,” the report suggested.
Future Opportunities in the Domestic Gas Market Post-2030
The ACCC highlighted that some LNG export contracts on the east coast would expire by the mid-2030s, potentially freeing up significant gas reserves for domestic use.
“This presents an opportunity for utilizing domestic gas reserves to support gas supply on the east coast,” the report pointed out.
The ACCC also noted that certain LNG exporters were sourcing gas from third parties on the east coast to fulfill their contracts despite possessing sufficient reserves themselves.
It proposed that the government incentivize these exporters to develop their reserves, freeing up extra gas supplies for domestic consumption.
