LNG exporters dodge gas export controls: Madeleine King
The big Queensland LNG producers have avoided a threatened clampdown on gas exports for the second quarter of 2024.
Queensland’s LNG producers have avoided a threatened clampdown on gas exports after the Albanese government said sufficient volume was available to supply the east coast from April to June 2024.
The federal government introduced a quarterly gas “trigger” review – rather than the existing annual check – in a bid to protect domestic supply and stem industrial job losses.
However, it has yet to impose an export clampdown and said the competition regulator’s December update showed there was enough gas available for 2024.
“The minister’s decision was partly informed by the Australian Competition & Consumer Commission’s December 2023 interim gas inquiry report,” Resources Minister Madeleine King said.
“The data forecasts enough gas across the east coast to meet demand in 2024. However, market conditions will depend on how much liquefied natural gas is exported in 2024.”
The ACCC’s latest gas inquiry report forecasts balanced supply and demand next year if Queensland’s LNG producers export all of their currently uncontracted gas, or a 71 petajoule surplus if they only export their currently anticipated spot sales.
That figure is down from the 90PJ surplus forecast in the June report.
Still, the competition regulator warned extra gas would need to be transported from Queensland to Australia’s southern states to avoid winter shortfalls in 2024, amid a continuing tight outlook for users on the east coast.
The “government is confident Australia’s gas market will have enough supply from April to June 2024, there is enough pipeline capacity to bring gas supply to southern markets, gas storage levels are satisfactory and any domestic supply shortages can be addressed without reducing gas exports,” Ms King said.
The ACCC said while overall the supply of gas in 2024 was forecast to be sufficient across the east coast, LNG producers would need to commit small amounts of additional gas to the domestic market to avoid a shortfall in winter.
According to the report, the overall east coast gas market is expected to have enough supply to meet demand until 2028, but forecasts indicate the southern states will face significant shortages of locally produced gas from 2027.
The three LNG plants – owned by Santos, Shell and Origin Energy – are currently controlled by the Australian Domestic Gas Security Mechanism, which gives the government power to halt LNG exports if a domestic shortfall year has been declared.
However, since coming to power Labor has criticised the Australian Domestic Gas Security Mechanism or gas trigger as a clunky measure that takes too long to implement, because the government has to make its shortfall declaration before November, prior to the following calendar year.
A decision was made last year for Ms King to receive expert advice every three months – rather than once a year – with the power to start the process of activating the Australian Domestic Gas Security Mechanism if it is thought that there is a risk of domestic gas supply shortages.
The decision was among measures announced in the 2022 federal budget.
Treasury allocated the Australian Competition and Consumer Commission $40m for the increased oversight of gas markets.
Australian manufacturing firms were last year offered gas contracts of up to $35 a gigajoule – more than triple levels from a year ago – with the Australian Industry Group at the time warning that the surging price could lead to job losses, deferred investment and possible manufacturing plant closures.
Prices have fallen considerably since then but remain above levels of five years ago.
Ms King in October warned that decreasing supply faster than demand would lead to “shortages, supply disruptions and high prices”, while also “worsening poverty and inequality”, launching a strong economic defence for the fuel source’s role in underpinning the nation’s clean energy transition.
Ms King said the government’s future gas strategy would provide the “long-term policy clarity needed to support decisions across communities, industry and governments”, while also helping households make decisions about using gas.
More Coverage
