Southern states could be left at the mercy of international LNG market if domestic production is not maintained
The Australian Competition and Consumer Commission (ACCC) has urged Commonwealth and state governments to “reduce regulatory barriers” to investment in new gas supply and explicitly recognise the critical long-term role of gas in Australia’s energy transition.
While the nation’s southern states might need to import gas to meet demand beyond the short term, any importation of gas would not obviate the need to continue domestic gas production, according to the commission.
The ACCC’s latest quarterly report on Australia’s east coast gas market confirms the gas industry continues to provide reliable and affordable energy for Australian homes and businesses, estimating a surplus across the east coast over 2025 and 2026.
However, it warns the populous states of New South Wales (NSW) and Victoria face peak-period shortfalls this [southern hemisphere] winter and structural shortfalls across the east coast by 2027 if new gas projects are not developed.
Ensuring the continued domestic supply of gas will be important to limit risks to energy security on the east coast and market stability associated with reliance on international liquefied natural gas markets, noted the commission in its latest report, which was released on 10 January.
“Our current projections indicate the potential for structural gas shortfalls on the east coast from 2027 unless supply increases or demand decreases,” ACCC commissioner, Anna Brakey, said.
“Currently, there are significant barriers to new domestic gas supply becoming available due to lengthy regulatory approval processes, large upfront capital costs, an uncertain policy environment and a lack of competition in upstream gas markets.”
Australian Energy Producers chief executive, Samantha McCulloch, said the ACCC report underscores the urgency for governments to fast-track new gas projects and provide policy certainty to avoid shortfalls and higher energy prices across eastern Australia.
“The ACCC has again urged governments to address the regulatory approval delays, legal hurdles and ‘an uncertain policy environment’ delaying new gas projects and deterring investment,” said McCulloch.
“At a time when Australians are facing cost-of-living pressures, governments must do everything they can to remove these barriers and ensure reliable and affordable energy for Australian homes and businesses.”
She welcomed the ACCC’s recommendation that ‘the role of gas should be explicit in government planning for the energy transition’ to incentivise and coordinate investment in new gas supply and infrastructure.
The report noted that LNG imports are likely to be required to supplement gas supply in Victoria and NSW, but cautioned imports could increase gas prices and ‘continued domestic gas production will be important to limit risks to energy security on the east coast and market stability associated with reliance on international LNG markets’.
McCulloch added that Victoria and NSW should focus on developing their own abundant gas reserves instead of relying on imports.
“The priority should be on providing reliable and affordable gas sourced close to where it is needed,” she said.
“Australian gas producers are committed to providing reliable and affordable energy for Australian homes and businesses, but as the ACCC has confirmed, governments must act to restore investment confidence and ensure timely approvals for new gas supply.”
In 2017, the Australian government directed the ACCC to conduct a wide-ranging inquiry into the supply of and demand for natural gas in Australia, and to publish regular information on the supply and pricing of gas. The commission will conduct the inquiry until 2030.