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energy reporter Daniel Mercer

Australia's eastern states will have enough gas, ACCC says

The ACCC says there will be enough supply for eastern states if gas producers supply to the domestic market. (ABC Kimberley: Ben Collins)

Warnings about a potentially crippling gas shortage across Australia's eastern states have been scrapped after the competition watchdog said supplies would now be sufficient to meet demand.

In a move that may ease growing tensions between the federal government and gas industry players, the resources minister has decided not to pull the so-called trigger that would require exporters to set aside more supplies for the domestic market.

In a report handed down Monday afternoon, the Australian Competition and Consumer Commission (ACCC) found the outlook for gas supplies across the east coast had significantly improved in recent months.

It followed dire warnings in August last year when the commission said the domestic market covering states other than Western Australia could end up with a gas shortfall of 56 petajoules — or 10 per cent of annual demand — in 2023.

A subsequent report released in January found that while the forecast gap had narrowed, there was still an expected deficit of supply amounting to 30 petajoules.

The regulator on Monday said the shortfall had been all but erased in the intervening three months.

ACCC chair Gina Cass-Gottlieb said there would be enough gas to meet demand from businesses, industry, and households as long as exporters committed an extra 3 petajoules.

WA's separate market

Ms Cass-Gottlieb cited an increase in production along with a commitment by liquefied natural gas [LNG] exporters to sell more product in the domestic market for the improvement in the situation.

"The available data shows that the outlook for the east coast gas market has improved and the market is not expected to face a material shortfall in 2023," Ms Cass-Gottlieb said.

"If LNG producers commit an extra [3 petajoules] of gas to the domestic market, in addition to amounts already contracted, a shortfall will likely be avoided."

Despite this, she said the ACCC remained worried about the supply outlook during the southern winter months when demand for gas for heating and electricity often peaked.

There are growing concerns that some southern states — particularly Victoria — will run short of the fuel at peak times in winter from as early as this year as production from historic fields in the Bass Strait dramatically tapers away.

The Bass Strait has long been a major source of Victoria's gas, but supplies are depleting. (Supplied: ExxonMobil)

Ms Cass-Gottlieb said the watchdog's first seasonal forecast had yielded "more mixed" results, with a shortfall of 11 petajoules flagged over winter, including a 26-petajoule deficit for southern states.

While this was expected to turn into a surplus of 18 petajoules by the fourth quarter, she said the situation would need to be managed carefully to protect users.

She said lower-than-expected production in fields from places such as the Northern Territory or a jump in demand for gas-fired electricity could cause problems.

"If gas supply is brought forward, for example through gas swaps, or if LNG producers commit further gas to the domestic market, supply should be sufficient to meet demand in the third quarter of 2023," she said.

"We encourage producers to consider this information and amend their plans to ensure domestic demand will be met each quarter."

Energy relief package

Federal Resources Minister Madeleine King said the ACCC's report backed moves by the government to ensure a "supply crisis didn't eventuate".

Ms King said the commission's findings played an important part in her decision not to invoke the Australian Domestic Gas Security Mechanism — known as the gas trigger — for the upcoming quarter.

She said gas had a "key role to play" in the transition to renewable energy "while guaranteeing energy security both for Australia and for our partners in the region".

"The government understands that reliable energy supply and affordable energy prices are top of mind for Australian families and Australian businesses," Ms King said.

"This is why we also took action with the Energy Price Relief package to take the sting out of energy price rises.

"I continue to work with the resources sector to ensure it delivers the energy and minerals needed for our own security and clean energy transformation, as well as well as the energy security of our trading partners."

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