The Australian Competition and Consumer Commission (ACCC) today released its gas inquiry July 2021 interim report, which highlights the immediate and long-term concerns of the east coast gas market.
The report reveals a supply shortfall in Australia’s gas market is increasingly likely, especially in the southern states for 2022.
A shortfall of 2 PJ could arise across the gas market next year, driven by a shortfall of up to 6 PJ in the southern states, if LNG producers export all of their surplus gas.
“The precarious supply situation for next year highlights the importance of the new Heads of Agreement that the Australian government signed with LNG exporters in January 2021,” said ACCC Chair Rod Sims.
The agreement mandates that LNG exporters must offer uncontracted gas to the domestic market on internationally competitive terms before it is exported.
Australia is one of the biggest exporters of gas, and yet it has some of the highest gas prices globally.
“The initial responses from LNG producers were concerning given that in the near future Australia’s southern states may depend on their surplus gas,” said Mr Sims.
“We expect to see better compliance from LNG exporters over the next 12 months.”
LNG producers must provide relevant material to the ACCC to demonstrate their compliance.
The report shows prices for contracted gas in the east coast market through to February 2021 remained at the lower levels observed during 2020; however, the tightening supply situation means these prices may not last.
The ACCC is required to submit interim reports at least six-monthly and provide information to the market as appropriate, with a final report by 30 December 2025.
For more information visit the ACCC website.