Gas shortfall forecast without significant demand drop

Gas will need to be transported from Queensland to the southern states to avert shortfalls in locally produced gas next winter, an inquiry warns.

The Australian Competition and Consumer Commission's gas report released on Friday shows gas prices have fallen from their peak of $49 per gigajoule in August 2022.

NSW, Victoria, South Australia and Tasmania are warned to expect larger shortfalls of locally produced gas in the winter months. 

But there is sufficient pipeline capacity to transport the required gas south from Queensland, the ongoing 2017-2030 gas inquiry found.

The price cap in place since December 2022 has meant gas sold to the domestic market under short-term contracts for 2023 supply has been at or below $12/GJ.

For 2024 gas supply, producer offers averaged $14.60/GJ, down 45 per cent compared to the inquiry's last report six months ago, while retailer offers averaged $19.50/GJ, down 21 per cent.

"In the longer-term, current expectations of gas demand through the energy transition will still require additional sources of gas supply," the ACCC said. 

"There will be gas shortfalls without the development of new gas fields, pipelines and potentially LNG import terminals or without a significant reduction in demand."

Samantha McCulloch, Chief Executive of APPEA
Samantha McCulloch says intervention and regulatory uncertainty have delayed new gas supply.

While total domestic production and supply has not changed, LNG producers have more uncontracted gas that could be exported. 

The east coast LNG producers sell their gas to international buyers but are also a major source of supply domestically.

The short-term outlook is for sufficient gas to meet demand in 2024, but with a reduced surplus.

If producers only export what they currently anticipate they will sell as spot or additional sales, there will be 71 petajoules of gas available to the east coast market next year - down from 90PJ forecast six months ago.

Australian Energy Producers CEO Samantha McCulloch said the report showed that government intervention and regulatory uncertainty had delayed new gas supply that would have put downward pressure on prices for Australian homes and businesses.

"This is especially so in southern states where cheaper new gas could be developed closer to customers," she said.

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