By Sonali Paul
MELBOURNE, Feb 16 (Reuters) - Australia's southern states will need to import natural gas to fill a looming shortfall by 2024, as last year's COVID-19 induced oil and gas price slump has slowed investment in new fields, the country's competition watchdog said on Tuesday.
Regulators have warned of a potential gas shortfall since 2016 as the market's mainstay gas source off the south coast is drying up, but the supply crunch is now rapidly approaching, the Australian Competition and Consumer Commission (ACCC) said.
"It is concerning that the risk of a gas supply shortfall in Australia's southern states continues, despite this having been a looming issue for some time," ACCC Chair Rod Sims said in a statement.
Last year's oil and gas price slump brought some relief to gas buyers but has slowed investment in new gas projects, which has "increased the supply risks facing the gas market over the medium term," the ACCC said.
Even if existing proved and probable gas reserves in the northern state of Queensland are developed, there could be a supply gap of 30 petajoules (PJ) as early as 2024 in the southern states, the ACCC estimated.
"To ensure supply is sufficient to meet demand, the southern states will require either increased north-south pipeline capacity, the development of additional onshore and offshore gas fields, or the construction of one or more LNG import terminals," it said in its latest gas market update.
There are five proposed liquefied natural gas (LNG) import terminals, two in New South Wales, two in Victoria and one in South Australia. Only one of those, Port Kembla in New South Wales, has moved into site preparation so far. the Port Kembla terminal is built before 2024, that should plug the supply gap in the southern states and the east coast market until 2028, the ACCC said.