Time to remedy deteriorating short-term outlook for east coast gas supply

Indi Independent federal MP Helen Haines has called on the federal government to better guarantee local gas supply in the wake of the ACCC’s latest gas inquiry report. The report released last week said the east coast gas supply outlook for 2025 and 2026 has deteriorated despite an easing in gas prices in the second half of 2024. It said there is a risk of a shortfall in the fourth quarter of 2025 and throughout 2026 if Queensland LNG producers export all uncontracted gas. It is expected that southern states will need to continually rely on gas from Queensland as their local reserves deplete. There is no change to the medium-term outlook, with structural shortfalls on the east coast still projected from 2028 unless new gas supply is brought online. “Gas prices eased over the past six months, reflecting movements in international prices and an increase in market activity following implementation of the Gas Code,” ACCC Commissioner Anna Brakey said. “However, prices continue to be higher than pre-2022 levels. "Concerningly, supply into the domestic market has fallen since that time and gas is increasingly being sold on a short-term basis, posing challenges for gas users who need longer-term certainty for their businesses. “Gas policy in recent years has largely been directed towards the LNG producers to ensure that their uncontracted gas is available in the short term to avert domestic shortfalls. “For long-term energy security and affordability, however, it is critical to address underlying barriers to more efficient investment in domestic supply.” There are sufficient gas reserves and resources to meet projected domestic demand for at least the next decade, but these are yet to be developed due to a combination of policy, technical and commercial factors. Long-standing impediments to the development of east coast gas reserves by a diversity of suppliers need to be addressed, the report recommends. It also said that Queensland’s gas reserves and resources, which are substantially held by the LNG producers, will be key to meeting the needs of the east coast gas market. The report examines individual Queensland LNG producers’ export operations and their role in the domestic market given each of the LNG producers’ different gas holdings and impacts on the domestic market. “The report also provides a robust evidence base to support informed engagement by the market, government and the public on policy decisions and regulation, including in respect of the upcoming Government Gas Market Review in the context of continuing concerns about the adequacy of gas production and the efficiency of the east coast gas market,” Ms Brakey said. “The LNG exporters are the only producers with discretion to either export their uncontracted gas, or supply it into the domestic market, so understanding what can affect this ‘swing gas’ and the decisions they could make about gas will be necessary for consideration of options to manage shortfall risks and for effective policy responses." Dr Haines said Australia does not currently have the proper rules and laws to ensure we have enough domestic gas supply. "It’s ironic that as we face a gas shortage, gas companies are exporting enormous amounts of gas, with next to no benefit to the Australian taxpayer, because of the weakness of the PRRT (Petroleum Resources Rent Tax),” she said. "We need to ensure affordable, reliable domestic supply while effectively transitioning our energy system to renewable sources to reduce emissions."

Time to remedy deteriorating short-term outlook for east coast gas supply

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