Gas shortfall fears take back seat as surplus forecast

Fears of a gas supply shortfall have been tempered for now, with the consumer watchdog projecting a surplus for Australia’s east coast.

The Australian Competition and Consumer Commission finds conditions in the gas market “eased somewhat” in the first half of 2024, driven in part by an expected surplus in 2025 and an uptick in market activity.

The watchdog projects excess production of between 77 and 112 petajoules on the east coast in 2025, depending on LNG producers’ uncontracted gas exports.

A shortfall of 16 PJ is still anticipated in the southern states however, with gas still needing to be transported from Queensland to meet demand.

“This is an improvement in the supply-demand outlook, largely driven by increased production from Queensland,” Friday’s report said.

Western Australia has kept 15 per cent of gas production for domestic use since 2011.

Despite ranking among the world’s biggest gas exporters, Australia has faced repeated warnings it might not have enough to meet domestic demand.

The commission further highlighted softening domestic gas prices, dragged lower by improved supply and lower international prices.

But even with the projected east coast surplus and the increase in market activity weighing on prices, gas prices remain “materially higher” than pre-2022 levels.

“While lower than the highs observed in 2022, the prices agreed to over the first six months of 2024 for 2025 supply are around two times higher than they were for the 2021 supply year,” the report said.

Energy Minister Chris Bowen said his government was working to deliver a stable electricity grid and cheaper energy with more renewables and “gas ready to firm it when needed”.

“For 10 years under the former coalition government, AEMO (the Australian Energy Market Operator) warned about looming gas shortfalls leaving Australia with a gas bin fire which led to the shutdown of the National Energy Market in winter 2022,” Mr Bowen said.

“This government has turned that around, bringing on an extra 600 PJ of domestic supply - enough to power east coast generators for six years - through our enforceable commitments under our gas code of conduct and securing gas supply until 2027.”