The Australian Competition and Consumer Commission (ACCC) has provided assurance that Australia possesses adequate gas supply to fulfil domestic demand and increase liquified natural gas (LNG) exports by 9% until early 2024.
The watchdog's latest inquiry, scheduled for release this Wednesday, indicates that gas supplies for the first quarter of 2024 will be 5.9 petajoules (PJ) higher than the June forecasts and 13% greater than the previous year.
Demand expected to be higher
The report highlights that export demand for the same quarter will be 8.2 PJ higher than earlier projected, equivalent to an extra US$2 billion in revenue for gas producers.
Despite the robust export figures, the east coast will still have a surplus of 1.4 PJ, even if all uncontracted gas is exported.
The Albanese Government considers these findings as validation of its stringent industry regulations, which were bolstered last year by a mandatory code of conduct and an emergency cap on gas and coal prices.
Treasurer Jim Chalmers said, "Our Energy Price Relief Plan is deliberately designed to deliver better, fairer prices for Australian consumers ... it’s really pleasing to see more evidence that it is working as we intended."
Caution attached
But the upbeat forecast comes with a caution. Resources Minister Madeleine King noted that the report would prevent her from exercising the Australian Domestic Gas Security Mechanism, which restricts LNG exports in the case of local shortages.
The optimistic supply outlook may reduce the impetus for more production, given that energy companies already face regulatory hurdles.
Moreover, the ExxonMobil Gippsland Basin joint venture, responsible for more than 70% of southeast Australia’s domestic gas demand, is depleting rapidly.
While the country’s gas storage is currently near full capacity, an upcoming El Nino weather system could increase cooling demand, straining the existing infrastructure.
While the report brings relief to major gas producers like Shell (LON:RDSa) and Origin Energy, it raises questions about the long-term sustainability of Australia's gas supply, especially under changing weather conditions.