Canberra brokers emergency gas volume deal to get states through winter

Queensland LNG producers may be forced to delay exports and power station producers could be called on to divert gas into the domestic market.

The Albanese government has been forced to strike an emergency deal for gas volumes this winter after the competition regulator issued shock figures warning a shortfall of gas supplies for southern states had doubled from last year.

Queensland LNG producers may be forced to delay exports of gas and power station producers could be called on to divert gas into the domestic market after federal Labor held meetings with major industry players to head off the potential winter crisis.

The Australian Competition and Consumer Commission blamed increased LNG exports and a fall in production from the Bass Strait and Cooper basin for the supply squeeze.

It predicts gas supply in the east coast gas market could fall short by 9 petajoules from July to September if LNG producers export all their uncontracted gas.

The supply shortfall is projected to reach a record of 40PJ for the three-month period which the ACCC warned increases the risk of a shortfall across the east coast without access to the LNG producers’ surplus gas.

“The east coast supply and demand balance is projected to worsen further over the next few years, which will increase the impact of LNG producers’ decisions on the market. It remains crucial that LNG producers have regard to the domestic outlook before making any significant variations to export volumes or schedules,” ACCC Commissioner Anna Brakey said.

Resources Minister Madeleine King blamed the previous Scott Morrison-led Coalition government and said it had secured “proactive commitments” of 9PJ of gas for the third quarter, which would prevent domestic demand being in competition with export customers.

“Australians are under the pump and that’s why we acted decisively to take the sting out of energy and gas prices,” Ms King said in a statement.

Federal Resources Minister Madeleine King. Picture: Pema Tamang Pakhrin

The supply commitments involve call options to gas-powered generators, expressions of interests, delayed shipments of LNG cargoes and seasonal gas swaps.

The ACCC said a 40PJ shortfall of gas in the southern states will be met by transporting 30PJs of surplus gas from Queensland and drawing on 10PJ of southern state gas reserves.

The regulator’s report issued in January showed a 13PJ supply surplus for the third quarter of 2025 that has now deteriorated by up to 22PJs.

Ms Brakey warned there was little margin for error given the tight outlook.

“Without access to the LNG producers’ surplus gas, the current outlook provides very little buffer for unexpected events, including extreme weather, higher than allowed-for demand, or higher-than-usual outages in coal-fired power stations,” Ms Brakey said.

Ms King said she convened meetings this week with Australia’s major east coast gas exporters to assess the outlook for east coast gas supply over the coming months as the federal Labor government and its state counterparts scramble to prevent an economically damaging energy crisis.

“The winter months can see highly variable gas demand on days when the weather is cold in the southern states,” Ms King noted.

The gas crunch over recent years has in large part been sparked by the rapid depletion of supply sources in Victoria’s offshore Gippsland Basin, along with delays to other key projects including LNG import plants.

Australia’s east coast gas market has been crimped in the past few years due to Queensland LNG exports, onshore development restrictions, falling Bass Strait production, and the increasing cost of bringing new domestic supplies to market.

While Australia is among the world’s largest gas exporters, a lack of supplies left available for domestic use have forced the nation into the unusual position of having to develop import plants to ensure enough gas can be sourced for local businesses.

Originally published as Canberra brokers emergency gas volume deal to get states through winter