East coast gas crunch coming in 2027 – ACCC

Australia’s east coast gas consumers including businesses could face gas shortages in 2027 according to a new report from the Australian Competition & Consumer Commission.

This is a year earlier than previously thought and puts into stark light the failure of successive governments which have allowed the majority of Australian gas to be exported rather than used at home.

The federal government has issued a series of media releases celebrating extra gas from exporters under ‘enforceable supply commitments’, but even it does not pretend this is doing anything other than delay shortages.

As recently as last month Queensland awarded a swathe of gas exploration licences, but only one was earmarked for domestic supply.

The Australian gas market is now forecast to experience gas supply shortfalls as early as 2027 unless new sources of supply are made available.

ACCC said: “This predicted shortfall is likely to take place one year earlier than what previous reports have forecast, with the extended operation of Eraring Power Station improving the outlook for 2027 but not altering the fundamental trajectory of supply.

“The forecast of earlier emerging risks is due to an increase in forecast gas consumption for gas power generation as well as a decrease in forecast supply due to delays in new gas projects and production problems in legacy gas fields.

“The report found that the southern states are expected to rely on gas transported from Queensland for the foreseeable future unless new sources of supply are made available, without any change in demand. From 2029, Queensland will also require new sources of supply.”

However, this report does not incorporate all potential volumes of gas that may come online under the government’s Gas Market Code exemptions framework.

ACCC Commissioner Anna Brakey said: “With long term export contracts for LNG producers due to expire from the mid-2030s, this presents a critical opportunity for policy considerations that promote efficient and more secure domestic gas supply as well as the export of gas.”

Further reading:
More gas available for customers, but have manufacturers noticed?
New gas permits for Queensland – only one for domestic industry

Image: ACCC analysis of data obtained from gas producers in January 2024 and of the domestic demand forecast (Step Change scenario and coal retirement delay sensitivity) from AEMO’s 2024 GSOO.