Gas shortfall to be earlier than expected: ACCC
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The news: A gas shortfall in Australia is projected to occur from 2027 — a year earlier than expected — due to delays in approvals for new projects and problems with legacy gas fields, according to a new report by the competition watchdog.
The numbers: The Australian Competition and Consumer Commission (ACCC) will on Friday release the 2017-2030 Gas Inquiry report, which will forecast a 7 petajoule surplus in the fourth quarter of 2024, a 54 petajoule forecast surplus in 2025 and a 69 petajoule surplus for 2026, even if LNG producers export all their uncontracted gas.
But the report projects gas shortfalls to emerge from 2027 unless new sources of supply are made available. This is earlier than the ACCC’s last forecast in December 2023 of a possible shortfall from 2028.
The context: The more pessimistic forecast reflects the lower projected supply due to delays in anticipated regulatory approvals for new projects and problems with legacy gas fields. According to the report, gas production in the southern states will decline over the short and medium term as gas fields in the Gippsland basin reach the end of their productive lives.
The ACCC warns there are no projects yet to be approved that could come online in time to prevent a shortfall in 2025. While report cautions that it is too early to assess the full impact of the government’s mandatory gas market code which came into full effect on 11 September, 2023, it shows that wholesale gas prices have decreased since the intervention.
What they said: “Gas shortfalls are projected to emerge from 2027 unless new sources of supply are made available,” the ACCC report said. “This is earlier than our last forecast (in December 2023) of a possible shortfall from 2028, reflecting lower forecast supply due to delays in anticipated regulatory approvals for new projects and problems with legacy gas fields.”
Treasurer Jim Chalmers said the report “shows that our efforts to deliver more gas at more reasonable prices are making a meaningful difference”.
“Australians are under the pump and that's why we’ve taken decisive action to take the sting out of energy and gas prices — policies the Coalition voted against,” Chalmers said.
“Our economic plan is all about easing the cost of living for Australians which is why this week we’re rolling out more relief including tax cuts for every taxpayer and help with energy bills for every household and a million small businesses.
“Gas will play a crucial role in the energy and net zero transformation and our policies will help to ensure there’s sufficient domestic supply at reasonable prices.”
The sources: ACCC, Treasury
