The Australian Competition & Consumer Commission (ACCC) has confirmed that the gas industry is meeting its domestic supply commitment with a gas surplus forecast for the east coast gas market until 2024.
However, the ACCC warns of future shortages in New South Wales and Victoria, where present output is declining, putting pressure on Queensland supplies.
According to the Australian Petroleum Production & Exploration Association (APPEA), the latest ACCC June 2023 Interim Gas Inquiry Report confirmed enough supply, demonstrating the industry’s commitment to the domestic market and keeping the lights on along Australia’s east coast.
“Australia’s gas industry is delivering on its commitment to households and businesses,” APPEA Chief Executive Samantha McCulloch said.
However, the report’s warning that the southern states were increasingly reliant on Queensland and needed “substantial volumes of gas” to avoid shortfalls was the latest in a long series of cautions to Victoria and NSW.
“The ACCC report highlights there is not enough gas being produced in NSW and Victoria where huge populations rely on gas while uncertain regulatory regimes and bans are stifling investment in new supply,” McCulloch said.
She noted that due to the bans, moratoriums, and interventions, millions of gas users in NSW and Victoria pay an additional $2/GJ anytime their state must transport gas from Queensland.
“The best way to avoid shortfalls and put downward pressure on prices is to bring on new gas supply close to where it’s used because the cheapest gas is the gas closest to the customer,” she stated.
She highlighted the need for new supplies, such as the Santos Narrabri Gas Project, which could supply up to half the natural gas used in NSW.
According to McCulloch, the ACCC has also determined that regulatory uncertainty is still gripping the market and affecting contracting.
“Lack of contracting over [the previous 6 month] period may have been influence by market participants’ preference for holding off on contracting in response to the uncertainty of further regulatory changes,” the ACCC said.
McCulloch stated that there is significant concern about how the market will operate under the Mandatory Code of Conduct.
The Code, which is set to go into effect in early July, basically places the Australian government in charge of matching market demand with supply through bilaterally negotiated agreements with gas producers.
“It remains unclear how the market will function following the introduction of the Code, with the real test being whether it can bring on new gas supply needed to meet demand and avoid forecast shortfalls,” McCulloch added.
