ACCC warns of a record gas shortfall over winter
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The news: The Australian Competition and Consumer Commission (ACCC) has recommended that the federal government works with Queensland’s key LNG exporters to commit more gas to the domestic market to address a record winter gas shortfall on the east coast this winter.
The numbers: The ACCC’s March 2025 update for the inquiry into gas supply reports that the forecast gas shortfall in south-eastern states is expected to reach a record high of 40 petajoules in the September quarter. The projected shortfall in the period is 3 petajoules higher than last forecast and twice as large as the shortfall in Q3 2024.
The context: Released just hours ahead of Opposition Leader Peter Dutton’s budget reply speech, the report explained that declining production in South Australia and Victoria are to blame for the widened shortfall. This deficit will need to be met by gas from Queensland and gas drawn from storage.
The ACCC said that gas stores will be essential to meeting the southern state shortfalls and that the Iona Gas Storage Facility must reach capacity by the start of May 2025 to ensure gas sufficiency over winter.
The watchdog warned that while there is likely to be sufficient gas and pipeline and storage capacity to meet the southern states’ shortfall in the September 2025 quarter, the supply-demand balance is extremely tight, leaving only a “small buffer” for shocks. Unexpected coal-fired power station outages, extreme weather events or higher than permitted demand, could quickly exhaust the gas buffer.
The ACCC recommended that given the risks, a substantial part of LNG producers’ uncontracted gas should be committed to the domestic market, stating: “If more uncontracted gas is sold to the domestic market than exported, this will lessen the risk of shortages in the southern states.”
Dutton’s Thursday evening budget reply focused heavily on energy, stating that the Coalition’s national gas plan will prioritise domestic gas supply, address shortfalls and reduce energy prices. Dutton promised to introduce an east coast gas reservation to lower power prices and spend $6 billion to halve the fuel excise for 12 months. By immediately introducing an east coast gas reservation, Dutton said an additional 10-20% of the east coast’s gas will be secured.
What they said: “This changed outlook reflects the susceptibility of the supply/demand balance to short-term reductions in gas production and changes in LNG producers’ intended exports and swaps,” ACCC commissioner Anna Brakey said.
“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.”
The sources: ACCC gas inquiry March update, Capital Brief, ACCC press release
