Industry urges fast action on gas supply after ACCC report

The latest gas inquiry report by the ACCC, which is forecasting potential shortages in 2027, is a warning to governments to act urgently to fast-track new supply.

The ACCC brought forward its prediction of gas shortfalls on the east coast market from 2028 to 2027. Picture: Stuart McEvoy

The latest gas inquiry report by the Australian Competition and Consumer Commission, which is forecasting potential shortages in 2027, is a warning to governments to act urgently to fast-track new supply, the industry says.

The competition regulator brought forward its prediction of gas shortfalls on the east coast market from 2028 to 2027, calling for the urgent development of new sources of supply, and suggested the use of LNG import terminals as a stopgap measure.

The report “spells out the government actions needed to address long forecast shortfalls, including removing moratoria on new gas developments, speeding up approvals and reducing the infrastructure, regulatory and capital barriers faced by producers”, Australian Energy Producers CEO Samantha McCulloch says.

She says the introduction of price controls and the mandatory Gas Market Code has delayed new supply projects and “undermined the market certainty” needed to support investment and address structural shortfalls.

“The Australian Energy Market Operator warned that Victoria almost ran out of gas a fortnight ago because of strong demand for gas-fired power generation during a cold snap,” she said. “This should be a wake-up call that gas shortages and blackouts could happen as soon as this winter.”

Australian Energy Producers CEO Samantha McCulloch.

Woodside Energy pledged to deliver 250 petajoules of gas from Victoria’s Bass Strait between now and 2033 as it looks to head off a supply shortfall that could land by 2027. Woodside said it had been taking steps to support the east coast gas market following warnings about supply from AEMO and now the ACCC.

“We continue to work with Esso, the operator of the Gippsland Basin Joint Venture, to maximise gas production and offer all available volumes to market,” a Woodside spokeswoman said. “We also have a supply commitment with Esso under the Gas Code of Conduct for circa 260 PJ of gas to be made available between now and 2033. This volume of gas is from two infill well projects that would provide incremental production, subject to final investment decisions being taken. Woodside remains willing to work with government, industry and the community to explore other policy options that could be introduced to support increased domestic gas supply and put structural, long-term downward pressure on prices.”

The Energy Users Association of Australia said while some progress was being made to build a competitive gas market, key reforms such as the Gas Industry Code of Conduct were very much a work in progress.

“While we are observing some improved outcomes for gas customers, the results are still patchy with some EUAA members reporting improved pricing and fairer contract negotiations while others are not,” EUAA chief executive Andrew Richards said.

In its June 2024 gas inquiry interim report released on Friday, the ACCC concludes shortages on the east coast market will emerge by 2027 “unless new sources of supply are made available”.

The warning of a gas shortfall comes after a “threat notice” was issued last month by AEMO warning that supply in the east coast system “may be inadequate to meet demand” until the end of September.

The EUAA said data provided by the ACCC shows producer offers range from $12 a gigajoule to $17GJ and retailer offers range from $12Gj to $20Gj.

“While this ACCC report correctly states it is still too early to tell if the code is having the desired effect on the prices consumers pay for gas, it clearly highlights that negotiating power remains firmly with sellers,” Mr Richards said.

Originally published as Industry urges fast action on gas supply after ACCC report