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The competition watchdog has calmed fears of a looming gas supply shortage, saying there will be enough gas to meet Australian domestic demand into next year as it forecasts a 9 per cent lift in liquid natural gas exports.
The Australian Competition and Consumer Commission’s (ACCC) quarterly report into the gas market, released on Wednesday, projects that even if all uncontracted gas produced in Australia is exported, there will still be an overall east coast surplus.
Bass Strait gas production has fallen steeply.
A surplus is good news for households grappling with a cost of living crisis amid fears of prices rising even further. In June, the watchdog flagged a winter shortfall of gas for heating and electricity generation.
The latest ACCC Gas Inquiry Report projects there will be an overall east coast surplus of 1.4 petajoules in the first three months of 2024. Gas supply during the same period will be 5.9 petajoules higher than forecast in June and 13 per cent higher than actual supply in the first three months of this year.
Export demand is expected to be 8.2 petajoules higher than the June forecast and 9 per cent higher than actual LNG exports in the first three months of this year, adding about $2 billion to gas producers’ revenue.
If the LNG producers only export their long-term contract commitments and factoring in current anticipated sales, then there will be 19.9 petajoules of gas available to the east coast market, the interim report said.
Tennant Reed, director of climate change and energy at the Australian Industry Group, said despite the forecast surplus, the gas market was still “very tight”. There was also potential for things to go wrong like last year when a number of coal-fired power stations went offline at once.
“We shouldn’t breathe a sigh of relief and settle back in to the hammock just yet. However, it’s still a better picture than one year ago,” Reed said.
The fresh projections follow months of friction between the Albanese government and gas producers over a mandatory code of conduct governing the sector, released in June.
Treasurer Jim Chalmers said the code will deliver gas supply in coming years at reasonable prices for Australian industry, electricity generators and other users and will keep the lights on and manufacturing running. However, the federal opposition has criticised the code on the grounds it will hamper the efforts of producers to bring on new supply.
The code extends a $12-a-gigajoule cap on domestic gas sales until 2025, but exempts smaller producers and those who make significant commitments to supply gas domestically rather than export it overseas as liquefied natural gas.
The scrap over the code’s terms has contributed to some east coast producers questioning the viability of new gas supply projects, with Cooper Energy’s offshore Otway Basin project known as OP3D and Senex’s $1 billion Atlas project in Queensland still on hold.
The ACCC said its gas data was collected before the code was finalised, and its forecasts did not reflect a possible rise in supply commitments gas producers might make to gain an exemption from the code.
Reed said it was still too early to determine the full impact of the code. “So far our members are not seeing commercial offers that are consistent with that $12-a-gigajoule price cap. Everybody’s willing to give it time before passing judgement, but there’s no basis to expect a return of cheap gas.”
The watchdog’s export price parity outlook for prices in the low $20s per gigajoule was still high by historic standards, Reed said, although well below last year’s price surge.
Resources minister Madeleine King said the latest advice from the ACCC showed the gas outlook for 2024 was improving thanks to the sustained effort of government and industry to ensure there is sufficient gas supply at reasonable prices to meet domestic demand.
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