Key Report Predicts ‘Worrying’ Gas Shortage in Australia

A major report on gas supplies to Australia predicts a significant shortfall next year as soaring energy prices put pressure on household budgets.
Treasurer Jim Chalmers says the competition watchdog’s latest gas market investigation report highlights some “worrisome” features of the East Coast gas market.

“He predicts a significant gas shortage next year if gas producers do not supply more uncontracted or surplus gas to the domestic market,” he said.

A report from the Australian Competition and Consumer Commission released on Monday said there would be a shortage in 2023 if all of the surplus gas produced by exporters was sent overseas.
This portends a shortage amid growing demand and an increase in non-contract gas, which is likely to be sold offshore at higher prices.

The report says the deficit will be worse than the situation in 2017, when both the ACCC and the Australian energy market operator predicted a deficit next year.

This led the then coalition government to initiate the internal gas safety mechanism process and eventually cut a deal with gas exporters to make surplus gas available in Australia before it was sold overseas.
“(ACCC’s) findings are deeply concerning and I urge gas producers to do the right thing by the Australians,” said Dr. Chalmers.
“It is critical that our domestic gas supplies are secure and cost-competitive, especially when households and businesses are in a state of emergency.”

The shortage forecast came after coal production in New South Wales and Queensland hit record lows, putting pressure on other energy sources.

Hard coal production fell to its lowest level in history in the second quarter due to coal-fired plant shutdowns and fuel shortages, according to the Australian Energy Market operator.
East Coast wholesale gas prices more than tripled in the second quarter, jumping to an average of $28.40 per gigajoule from $8.20 in the same quarter last year, the operator said in its quarterly report.
The government has reserved its decision to pull the gas trigger to force exporters to set aside the resource for domestic use.

Mr. Chalmers said the government took the report’s findings seriously and would respond to the ACCC’s request.