Shortfalls, imports and exports – there’s a lot on the go in the gas industry. The Australian Pipeliner takes a closer look.
In late March, the Australian Energy Market Operator (AEMO) published its 2025 gas statement of opportunities, identifying shortfall risks in southern Australia from 2028.
AEMO pointed to expected falls in national consumption of gas, and the delayed retirement of Eraring coal power station (reducing the need for gas-powered generation) as primary reasons for the revision.
Critically, the report highlighted the need for new gas to fill potential domestic supply gaps beyond 2028, as production falls faster than consumption.
“From 2028, seasonal supply gaps may emerge in southern Australia if conditions lead to sustained high gas usage, while expanded production of uncertain supply will be needed to meet domestic and export positions in northern Australia,” the report said.
“In 2029 and later … annual supply gaps are forecast, meaning a structural need for new gas supply beyond developments classified as committed and anticipated is necessary.”
Policy and promises
That one of the largest gas producing nations in the world could be faced with such a shortage seems hard to swallow. But Australia’s energy landscape is a complex tangle of environmental, domestic, diplomatic and commercial interests.
According to pipeline infrastructure giant APA Group, the east coast domestic market is forecast to consume roughly 500 petajoules (PJ) of natural gas this year, with domestic supply producing around the same figure.
Fast forward to 2028, the market is predicting that gas from southern gas fields including the Bass Strait will decrease by around 37PJ. By 2033, southern gas field production is forecast to drop by around 270PJ.
Lengthy environmental approvals, coupled with tentative support for gas through policy, has made it difficult to bring new projects online to fill this impending gap.
Year-on-year, most of the nation’s gas is committed to international markets as liquefied natural gas (LNG).
These contracts are long-term – often multi-decade – and exporters argue that the financial security they provide enables the development of smaller-scale gas assets for the domestic market.
LNG is also a key lever in Australian foreign policy, underpinning economic ties with Japan and other South-East Asian countries.
And while there has been talk of reservation schemes that would force exporters to divert some supply to Australia, many in the gas industry argue that exporters should not be made to walk back on existing contracts for both economic and diplomatic reasons.
However, there is speculation that the re-elected Federal Government may implement a reservation scheme for future projects on the east coast, similar to the mechanism already in play in WA that requires 15 per cent be set aside for the domestic market.
The energy weathervane
With waning domestic supply and interference with the LNG export market uncertain, Australia must either push to bring new sources of gas online quickly or resign itself to importing LNG to fill the gaps. The latter is a prospect on which some, including APA Group, are cold.
“Becoming reliant on LNG imports will set the price of domestic gas and no doubt have a detrimental impact on consumer prices, and on industry,” APA CEO Adam Watson said, speaking at the Australian Domestic Gas Outlook conference in April.
“Over the most recent Australian summer and winter months, the Asian LNG spot price was between 50 and 80 per cent higher than the Federal Government’s $12 per gigajoule cap on wholesale gas prices.”
But the LNG import vision for Australia is gaining traction. In Victoria, there is a planned LNG import terminal in Geelong, which is projected to supply in excess of 120PJ of gas per year. While the project isn’t yet off the ground, it recently received a key environmental approval.
Even so, Watson said the key to Australia’s energy security – and to avoiding costly LNG imports – was creating the right regulatory and investment environment to bring new domestic supply online.
“These shortfalls can be filled by basins such as the Surat, which has more than 10,000PJs of uncontracted … resource available alone. There’s no shortage of domestic gas to meet the shortfall, we just have to get it out of the ground to support our demand centres,” he said.
“In short, with the right policy settings in place, we should not expect to see a domestic natural gas supply constraint over the near term.”
The Australian Pipelines and Gas Association expressed a similar sentiment in response to AEMO’s report.
“Governments and industry are constructively working together to improve east-coast gas supply, but only bipartisan policy can deliver long-term stability for gas transmission and downstream users,” APGA CEO Steve Davies said.
“The impact of uncertainty is already evident. Industrial gas consumption has fallen nearly 20 per cent between 2018 and 2024, declining from approximately 280PJ to 227PJ. This, in part, reflects the loss of manufacturers and industrial operations – Australian businesses that once supported jobs, investment, and economic growth.
“In an increasingly uncertain global environment, other nations are moving to strengthen their domestic industries by ensuring stable energy alongside targeted policy support.
Australia has an opportunity to do the same to keep businesses competitive and secure a resilient energy future.”
But all the gas in the ground doesn’t amount to much if it can’t be moved. And that’s exactly the problem that APA’s recently announced gas infrastructure expansion plan aims to solve.
Through a series of staged projects, APA will add new transport capacity to Australia’s gas network over the coming years, ensuring supply can reliably reach the country’s southern states.
These projects include the transition of the Moomba to Sydney ethane pipeline to natural gas – set for competition later this year – as well as the ongoing expansion of APA’s existing pipeline network.
With the role of gas in the clean energy transition now ratified in Australia’s Future Gas Strategy, and a shortfall front of mind for many in industry and government, the only thing certain is that Australia will pursue more gas. How it will source it remains to be seen.
This feature also appears in the May edition of The Australian Pipeliner.
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