Australia's competition watchdog has warned east coast households and businesses are facing a potential gas shortage this year, despite efforts by the federal government to safeguard supplies.
The Australian Competition and Consumer Commission (ACCC) on Friday released its latest report of the country's gas market, finding that users were still struggling to secure enough supplies to meet demand.
In a shot across the bow for gas producers, the regulator said the domestic market was facing a shortfall of 30 petajoules in 2023 — equivalent to about 5 per cent of annual consumption.
The ACCC has called on Australia's gas majors — led by the liquefied natural gas producers operating from Queensland — to provide more of their uncontracted supplies for the local market.
"The east coast gas supply forecast for 2023 has improved," ACCC chair Gina Cass-Gottlieb said.
"But the outlook remains uncertain as the LNG producers haven't yet committed sufficient volume under firm contracts to address the risk of a domestic shortfall."
It comes amid attempts by the federal government to rein in energy prices and shield consumers by capping coal and gas markets.
A backdrop of intervention
According to the ACCC, the report analysed data from up to early December and therefore did not take account the government's intervention, which came into effect later that month.
It comes amid a backdrop of tension between the government and gas users on the one hand, and producers on the other.
Many producers have reportedly been on a "gas strike", angered by the way the government handled the intervention, and frustrated by what they considered a lack of detail over how the new rules would work.
The rules have temporarily capped wholesale gas prices for the next 12 months at $12 a gigajoule.
The government has also given the ACCC power to enforce so-called reasonable pricing provisions on gas suppliers indefinitely.
The extraordinary steps were taken after domestic gas prices soared last year on the back of international market turmoil — initiated by Russia's invasion of Ukraine.
The ACCC noted in its report that LNG netback prices — a measure of local gas prices — ranged from $13 a gigajoule in mid-2021 to $39 a gigajoule in mid-2022.
At one stage last March, it said prices peaked at $100 a gigajoule.
At the heart of the rises, the ACCC said, was the concentration of market power in the hands of a few big gas exporters, which it said had "influence over nearly 90 per cent" of proven reserves.
Watchdog flags scrutiny
Ms Cass-Gottlieb said the wild gyrations in gas prices, which had subsided since the government intervened into the market, made the ACCC's role more important than ever.
"Our role monitoring and reporting on the market will be particularly important this year as it will provide an information base for assessing compliance with the price order and reviewing its effectiveness," she said.
The Australian Petroleum Production and Exploration Association, which represented gas producers, said the report showed there was enough supply to meet demand.
Chief executive Samantha McCulloch noted the ACCC had also highlighted the need for more investment in the gas industry to boost supplies.
"The industry has consistently highlighted that the key to avoiding gas shortages is through policy settings, which are conducive to bringing on more investment in supply," she said.
"The report also shows demand for gas in southern states is expected to exceed production by 52 petajoules from gas sources located in southern states, reinforcing the need for Victoria and New South Wales to develop their own resources, rather than rely on Queensland to do all the heavy lifting.
"We are now seeing the increased pressures from the impact of moratoriums and bans in Victoria and New South Wales — the two biggest users of gas on the east coast."
