Australia’s gas market in 2025: Policies, challenges and opportunities

The Australian gas market in 2025 is at the intersection of dynamic global energy demands, evolving regulatory frameworks, environmental concerns, and active stakeholder engagement. With significant natural gas reserves and a robust export industry, Australia remains one of the world's leading gas suppliers. However, the challenges posed by shareholder and environmental activism, regulatory scrutiny, and depletion of traditional reserves highlight the complexity of maintaining a sustainable and profitable gas industry. Export volumes and global markets Queensland is a major contributor to Australia’s position as the world’s largest LNG exporter. The state exported approximately 22.97 million tonnes of LNG in 2023, primarily through the Curtis Island terminals. Japan, China, and South Korea are the largest customers, collectively accounting for more than 70 per cent of Queensland’s LNG exports. This underscores the state’s role in meeting the energy needs of Asia’s rapidly growing economies. The global LNG market has a profound influence on Queensland’s gas industry. Price fluctuations, driven by factors such as geopolitical tensions, seasonal demand, and competition from producers including the United States and Qatar, directly affect the profitability of Queensland’s LNG projects. Additionally, the rise of spot market trading has created both opportunities and challenges for producers, as they adapt to a more dynamic and competitive landscape. Curtis Island: The hub of Queensland’s LNG exports Curtis Island, located off the coast of Gladstone, is the epicentre of Queensland’s LNG export industry. The island houses three massive LNG processing and export facilities—QCLNG (Shell), GLNG (Santos), and APLNG (Origin Energy and partners). Together, these facilities represent billions of dollars in investment and are integral to Queensland’s status as a global LNG exporter. Regulatory framework influencing operations The Australian gas industry operates under a comprehensive regulatory framework designed to balance economic growth, energy security, and environmental sustainability. Among the legislation are: National Gas Law (NGL): Governs pipeline access and market operations, ensuring fair competition and protecting consumer interests. Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act): Regulates environmental assessments for gas projects, ensuring that biodiversity and water resources are protected. State and Territory regulations: Each jurisdiction has specific rules for exploration, production, environment and land access. For example, Queensland’s policies promote coal seam gas (CSG) development, while Victoria has stricter controls on onshore gas exploration. Emissions reduction frameworks: Australia's commitment to net-zero emissions by 2050 influences the gas sector, with initiatives like the Safeguard Mechanism aiming to cap and reduce emissions from large-scale operations. Shareholder and environmental activism Shareholder activism: Shareholders increasingly demand greater transparency and action on climate-related risks. Companies like Santos and Woodside have faced resolutions urging them to align their operations with the Paris Agreement. Shareholders are leveraging their influence to push for clearer strategies on reducing emissions and transitioning to cleaner energy. Environmental activism: Environmental groups have challenged gas projects through protests, legal actions, and campaigns. The Scarborough gas project by Woodside Energy faced significant opposition led by the Environmental Defenders Office due to concerns over emissions and its potential impact on marine ecosystems. Similarly, community opposition to coal seam gas projects in regions like New South Wales has led to delays and project cancellations. Environmental concerns in gas exploration, drilling, storage, and transport Exploration: Seismic testing for gas exploration can disturb marine life and ecosystems. Land clearing for exploration disrupts terrestrial habitats and biodiversity. Drilling: Hydraulic fracturing (fracking) involves significant water usage and introduces chemicals that risk contaminating groundwater. Methane emissions from drilling operations contribute to greenhouse gas emissions. Storage: Underground gas storage facilities pose risks of leaks, which can lead to local air pollution and safety hazards. Long-term storage infrastructure may impact land stability. Transport: Pipelines and LNG transportation involve emissions and risk of accidents such as leaks or explosions. Shipping LNG to global markets requires energy-intensive processes, adding to the carbon footprint. Reserves supporting the current gas industry Australia’s proven gas reserves are concentrated in key basins: Cooper and Eromanga basins (South Australia): A significant source of conventional gas and liquids. Surat and Bowen basins (Queensland): The hub of coal seam gas production, critical for domestic use and LNG exports. North West Shelf and Browse Basin (Western Australia): Major suppliers of LNG for export markets, supported by offshore fields. Bass Strait (Victoria): Historically a cornerstone of Australia’s gas supply but now facing declining production. Under-explored reserves Beetaloo Basin (Northern Territory): Regarded as a potential game-changer, the basin has vast unconventional gas reserves. Exploration is ongoing, but development faces environmental and community opposition. Canning Basin (Western Australia): Largely under-explored, with potential for both conventional and unconventional gas. Great Australian Bight: Holds promise for offshore gas, though environmental concerns and regulatory hurdles have limited exploration. World energy needs and impact on Australia’s gas market Global energy demand is forecasted to rise significantly as developing economies expand and transition from coal to cleaner energy sources like natural gas. The International Energy Agency (IEA) predicts that natural gas will play a critical role in the energy transition, driven by its lower emissions compared to coal and oil. Impact on Australia: Export opportunities: Increased global demand, particularly from Asia, enhances Australia’s position as a leading LNG exporter. China, Japan, and South Korea remain key markets. Supply pressures: High export volumes create domestic shortages, raising concerns about affordability and energy security. Economic benefits vs. domestic needs: Balancing export income with domestic supply obligations is a growing challenge, as local industries and households demand more affordable energy. Depletion of traditional sources The Bass Strait, which has supplied gas to southeastern Australia for decades, is experiencing a significant decline in production. This depletion pressures the market to develop alternative sources and manage the transition effectively. Response to depletion: Domestic supply prioritisation: Policymakers are pushing for more domestic allocation to ensure affordable energy for Australians. This has led to tensions with exporters who prioritise higher-value international markets. Infrastructure investments: New pipeline projects and gas import terminals are being considered to address supply shortages. Exploration of new reserves: The focus on under-explored basins, such as Beetaloo, underscores the need to replace declining reserves. Opportunities and challenges Opportunities: Energy transition: Gas is positioned as a transition fuel, bridging the gap between coal and renewables. Economic growth: The gas sector supports jobs, regional development, and export revenue. Technological innovations: Advancements in carbon capture and storage (CCS) and renewable gas production can enhance sustainability. Challenges: Environmental impact: Addressing emissions and habitat disruption remains critical. Community opposition: Ensuring social license to operate is essential for project success. Regulatory and market pressures: Balancing domestic and export demands while adhering to stricter regulations is a persistent challenge. Conclusion Australia’s gas market in 2025 reflects the complexities of balancing global energy demands with environmental sustainability and domestic needs. While the sector offers significant economic opportunities, addressing challenges like environmental concerns, declining reserves, and regulatory compliance is crucial. By leveraging technological advancements and exploring under-utilised reserves, Australia can maintain its position as a leading gas producer while aligning with global energy transition goals.

Australia’s gas market in 2025: Policies, challenges and opportunities

Industry Queensland

Related News

Phosphate Hill plight points to broader issues – KAP

Fortescue scales back green hydrogen jobs

Quick fire – industry news briefs

Get access to breaking mining news, now.