Record winter gas shortfall is coming: ACCC
28 . 03 . 2025
Article by Angela Macdonald-Smith and Ryan Cropp, courtesy of Financial Review
27.03.2025
The competition watchdog has urged the federal government to work with Queensland’s three LNG exporters to ensure they free up more gas for the east coast market after it found the threat of a shortfall this winter had worsened.
In the south-eastern states, the forecast shortfall is now expected to reach a record high of 40 petajoules in the September quarter unless the LNG producers keep some uncontracted gas at home, the Australian Competition and Consumer Commission said.
It warned that unexpectedly cold weather or outages of coal-fired power plants could result in supply shocks unless more gas was committed to domestic sales.
“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,” said ACCC Commissioner Anna Brakey.
“It remains crucial that LNG producers have regard to the domestic outlook before making any significant variations to export volumes or schedules.”
Shortfall doubles
The latest assessment was released just two hours before Opposition Leader Peter Dutton’s budget reply speech, which was widely expected to feature details of a new Coalition policy aimed at boosting domestic gas supply.
The ACCC report said the predicted 40-petajoule shortfall of gas in the southern states in the September quarter was double that of the same time last year. The report blamed declining production in Victoria and South Australia and higher demand for gas for electricity generation. Total demand in the quarter is expected to be 502 petajoules.
It said the shortfall would have to be filled by piping about 30 petajoules of gas southwards from Queensland and by drawing on gas in storage, with the Iona underground plant to play a critical role.
“Without access to the LNG producers’ surplus gas, the current outlook provides very little buffer for unexpected events, including extreme weather, higher than allowed-for demand, or higher-than-usual outages in coal-fired power stations,” Brakey said.
The ACCC report appears to present a more serious risk of a shortfall during peak-demand winter days than last week’s report from the Australian Energy Market Operator, which put back the risk of shortfalls on the east coast by three years to 2028.
Federal Climate Change and Energy Minister Chris Bowen last week announced a deal with Origin Energy’s LNG venture in Queensland for up to 40 petajoules of extra supply over four years as part of the government’s response to the gas squeeze on the east coast.
In more positive news on gas prices, the ACCC said contract prices for fuel delivered by producers this year and next had eased. Prices fell about 10 per cent in the second half of 2024 from the first half, to an average of $13.58 per gigajoule.
Prices also dipped by 2 per cent for 2026, which Brakey described as “encouraging”, adding there was still a way to go.
