Concerns over a potential gas shortage on Australia's east coast could again gain traction as large producers, including Shell (LON:RDSa) and Santos, are set to reveal forecasts of their uncommitted gas supplies for the next two years.
This follows the Albanese Government's new code of conduct, which mandates these disclosures to increase market transparency.
"East coast has always been about how fast Gippsland gas declines and ultimately when a regas [LNG import] facility will come online and be viable. If declines are as forecast, the market is getting pretty critical in terms of getting a terminal online,” said an industry source.
The Australian Energy Market Operator had previously warned about a shortfall, especially as some planned projects remain stalled due to government price caps.
Gas usage on the east coast fell by 15% in the June quarter from a year earlier, according to EnergyQuest. That came as production from the region's primary domestic gas supplier — the Gippsland Basin joint venture between ExxonMobil and Woodside Energy — slumped by 34% over the period.
Despite these factors, east coast spot prices are down 50% from last year when the energy system was hit by power station outages.
The gas producers' data, which is slated for publication on September 11, aims to equip gas buyers with crucial market information. This comes amidst research by ACIL Allen highlighting the significant economic contributions of the natural gas sector, amounting to an estimated $121.17 billion last year.
While the data is expected to illuminate market conditions, it will also be a critical factor for future investment and supply chain decisions, placing the focus squarely on the transparency and long-term stability of Australia's gas markets.
Western Australia faces own energy challenges
This emerging situation in the east coast comes as Western Australia grapples with its own crisis. Pressure from LNG exporters and concerns about sufficient supplies for the local market have sent spot gas prices surging by almost 66% from a year earlier.
Government restrictions on gas exports from onshore fields have triggered concern about domestic supply in WA. But local producer Strike Energy argues the policy is not only reducing gas delivery into the domestic market but creating investment hurdles for new projects.
And we can now add strike actions at Chevron (NYSE:CVX)'s Gorgon and Wheatstone LNG plants, which supply about 7% of global LNG supply and 47% of Western Australia’s domestic gas.
The union stoppages that began last Friday have already sent European gas prices soaring and are expected to average about 10 hours per day until Thursday before production is stopped for full 24-hour strikes for two weeks.