ACCC warns of ‘structural decline’ in domestic gas supply

New gas production and supporting infrastructure are not being brought online fast enough in Australia despite natural gas playing a critical role in the energy transition, the ACCC’s latest gas inquiry report has found. While forecasting a surplus in east coast gas market supply in 2025 and 2026, the consumer watchdog said domestic gas supply was in structural decline and future investment was uncertain. The southern states are already facing seasonal shortfalls and are dependent on gas being transported from Queensland. “Our current projections indicate the potential for structural gas shortfalls on the east coast from 2027 unless supply increases or demand decreases,” ACCC Commissioner Anna Brakey said. “Currently, there are significant barriers to new domestic gas supply becoming available due to lengthy regulatory approval processes, large upfront capital costs, an uncertain policy environment, and a lack of competition in upstream gas markets. “To improve the longer-term outlook, it is essential that measures are introduced that support efficient and timely investment on the east coast and, more broadly, an orderly transition of the electricity and gas markets.” The report has recommended that the role of gas be made explicit in government planning for the energy transition to underpin market-led solutions to achieve energy security and support gas markets in the transition. One option to help achieve this would be development of a gas market system plan, similar to the Integrated System Plan for electricity, which would identify and coordinate planning for needed gas investments. There is now estimated to be between 77 and 112 petajoules of surplus gas on the east coast in 2025. In 2026, the forecast surplus is between 54 and 99 petajoules. The latest quarterly projections reflect the shifting of some contracted export volumes from the domestic peak to off-peak demand periods, as well as higher levels of gas production in Queensland. These shifts are supported by gas swap arrangements, where LNG producers supply more gas to the domestic market to help meet peak gas demand in the winter months and purchase gas from the domestic market in other periods to meet their reshaped contracted export commitments. “The latest projections for 2025 suggest that the east coast will be in surplus in each quarter next year, including in the winter months when demand for gas is typically at its highest,” Ms Brakey said. “While there is likely to be sufficient overall supply across the east coast in 2025, the southern states are projected to be in shortfall over the winter months and will continue to rely on gas from Queensland or from storage to meet peaks in demand.” The ACCC’s next report on the gas inquiry’s supply-demand outlook will be published in March 2025.

ACCC warns of ‘structural decline’ in domestic gas supply

Industry Queensland

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