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The outlook for gas supply across Australia’s east coast in 2023 has improved, with a shortfall increasingly less likely, according to the consumer watchdog.
The Australian Competition and Consumer Commission on Monday released its March 2023 interim gas inquiry report in which it claimed if Australian gas producers contracted just three more petajoules (PJ) of gas to the domestic market in 2023, there “should be sufficient gas supply in the east coast gas market against forecast demand”.
The current gas supply situation represents an improvement of 27 PJ on the ACCC’s January forecast when it predicted a shortfall of 30 PJ of gas for 2023.
“The available data shows that the outlook for the east coast gas market has improved, and the market is not expected to face a material shortfall in 2023,” ACCC Chair Gina Cass-Gottlieb said.
“If LNG producers commit an extra 3 PJ of gas to the domestic market, in addition to amounts already contracted, a shortfall will likely be avoided, but we remain concerned about adequacy of gas supply in the winter months.”
The interim report compiles supply data from producers and demand data based on LNG sales, forecasts, and AEMO forecasts of domestic gas demand to give a 2023 outlook.
The end of 2022 saw the Albanese government take action to limit some of the worst impacts of rising gas prices across Australia.
As part of this plan, the government bolstered the ACCC’s resources by $12.5 million over the forward estimates to enhance its gas market monitoring and regulation and accelerate the implementation of reforms to the Australian Domestic Gas Security Mechanism.
The Labor party said while it was well-known that the war in Ukraine had played its part in sharp gas and electricity prices, pressures had been exacerbated by a decade of energy policy chaos that left Australia more exposed than it needed to be in tackling global energy shocks.
December predictions by the Federal Government anticipated that without action, gas prices would increase by 20 per cent commercially and domestically by 2024.
Exacerbating the issue is the fact that Australian east coast gas producers were shipping large portions of their production overseas instead of servicing the domestic market.
The ACCC’s first seasonal forecast of the east coast gas market predicted that in the winter months of 2023, there would be an expected domestic gas shortfall of 11 PJ, including a shortfall of 26 PJ in the southern states of Victoria and South Australia.
To make up for this shortfall, the ACCC said additional gas would need to be sourced from Queensland producers.
However, Ms Cass-Gottlieb said LNG producers had firmly committed 45 PJ of their previously un-contracted gas to LNG spot cargoes or additional sales to meet any advanced gas needs throughout the year.
“East coast LNG producers are expected to have un-contracted gas in each of the quarters of 2023 that could be used to prevent any shortfalls,” Ms Cass-Gottlieb said.
“We encourage producers to consider this information and amend their plans to ensure domestic demand will be met each quarter.”
Nevertheless, in the fourth quarter, a surplus of 18 PJ is expected across the market.
In 2017, the Australian Government directed the ACCC to conduct a three-year inquiry into the supply and demand for wholesale gas in Australia, although 2019 saw the extension of this research until December 2025.
