East coast states set to narrowly avoid gas shortfall in September quarter: ACCC

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Australia’s eastern states are expected to narrowly avoid a gas shortfall in the September quarter, according to a report released by the Australian Competition and Consumer Commission.

However, while the government is increasingly confident that households and manufacturers will have ample access to LNG supplies, the competition watchdog is more circumspect in its assessment.

“Actual gas supply may fall short of the volumes forecast by producers due to production issues and delays in regulatory approvals required to finalise investment in newly-developed fields,” the ACCC report, set to be released on Friday, cautions.

The use of gas pipelines and storage will be required to avert shortfalls, the report finds, with southern states expected to need an additional 25 petajoules of supply to be transported from either Queensland or the Northern Territory to meet forecast demand.

The report estimates the surplus of gas for Australia’s east coast market is 6 PJ in the forthcoming September quarter, even if all uncontracted LNG is exported.

Three months ago, the ACCC had forecast a surplus of 5 PJ.

Supply will be 7 PJ higher than was previously estimated in December, the report found.

Simultaneously, forecast domestic demand has decreased by 7 PJ due to a significant fall in estimated gas use for power generation arising from increased renewables in the grid.

However, LNG demand for gas powered generation could unexpectedly increase, should coal fired power plant closures, unseasonably cold weather, or other electricity infrastructure outages put supply and demand out of step, the report warned.

LNG export demand is expected to be 13 PJ higher than forecast in December, netting gas producers billions of dollars of extra income for producers.

Even as shortages are set to be averted in coming winter months, regulators have previously cautioned that households and manufacturers in Australia’s southern states could face gas shortages from 2028, threatening to send energy bills even higher.

Responding to supply concerns, the Albanese government inked a major deal with Australia’s largest gas producers, Esso and Woodside, earlier this year, worth 260 PJ up to 2033.

In November, APLNG and Senex also signed supply contracts with the government.

The agreements struck were exempt from Labor’s Mandatory Gas Market Code, allowing producers to exceed a price ceiling of $12 a GJ if they agreed to prioritise domestic users ahead of export markets.

Treasurer Jim Chalmers said the ACCC’s forecast was indicative of the success of the government’s interventions in the gas market.

“The Liberals and Nationals voted against energy relief for families and small businesses and said the sky would fall in as result of our price caps and gas code of conduct,” Dr Chalmers said.

“This data is more proof that they have no idea what they’re talking about.”

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