By Mike Foley and Nick Toscano
The competition watchdog has warned that the eastern seaboard is at risk of running low on gas a year earlier than it forecast in December, with major new supplies needed by 2027 to stop homes and businesses running short.
Its latest report on the east coast gas market, released on Thursday, highlighted challenges for the Albanese government, which is under pressure to shore up energy supply as it pursues an ambitious renewables rollout.
ExxonMobil’s Marlin B platform in the Bass Strait, which was traditionally the mainstay of the state’s gas supply but whose fields are now depleting rapidly.Credit: ExxonMobil
The Australian Competition and Consumer Commission’s report said there was an urgent need for new gas fields, additional pipeline capacity to bring more fuel from Queensland, or special import terminals to receive shipments from Queensland, Western Australia or overseas.
While forecast annual supply deficits have been brought forward from 2028 to 2027, the ACCC and the energy market operator have both warned of the risk of gas supply gaps in NSW and Victoria on days of peak heating demand during winter cold snaps.
The Australia Energy Market Operator last month issued a rare “threat to system security” notice, which will last until September, over low gas supply amid a bout of chilly weather and low wind and solar output.
However, Treasurer Jim Chalmers said government policies would make a “meaningful difference” to supply over the next three years.
“Our reforms are working to secure more supply for the domestic market while putting downward pressure on energy prices,” Chalmers said.
He pointed to reforms such as the heads of agreement struck between the federal government and gas producers in 2022, which requires that all uncontracted gas is offered for sale in the domestic market before it is sold overseas, although it does not stipulate that any shortfalls must be filled.
The government released a future gas strategy in May that said new supplies were fundamental to the economic transition to net zero emissions and the industries in the government’s “made in Australia” agenda.
“Gas has an important role to play in our transition to net zero. The future gas strategy makes clear that we will need gas for some time yet to support renewable energy,” Resources Minister Madeleine King said on Thursday.
The growing threat of domestic gas shortfalls comes amid a rapid depletion of supplies from the 50-year-old Gippsland Basin gas fields in Bass Strait, which have traditionally provided the bulk of eastern Australia’s domestic gas.
While Australia is one of the top exporters of liquefied gas, massive volumes of production from Queensland’s gas fields are locked into long-term export contracts to LNG buyers in Japan, Korea and China, and gas produced in Western Australia cannot be transported to the east.
Australia’s reliance on gas – a major source of greenhouse gas emissions – has come into sharper focus as governments step up commitments to decarbonise.
Policies banning gas hook-ups in new residential buildings and encouraging people to switch gas appliances to electric alternatives are successfully driving down long-term gas demand forecasts.
However, the market operator has warned the shift is not happening fast enough to avert the threat of shortfalls for a fuel that remains widely used in heating, cooking, power and manufacturing.
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