PERTH (miningweekly.com) - Australia’s east coast gas market is expected to have enough supply to meet overall demand in 2024, the Australian Competition and Consumer Commission (ACCC) said at the tail end of last week.

In its June 2023 interim gas inquiry report, the ACCC noted that the outlook for winter in 2023 and 2024 was finely balanced and that southern states would be reliant on a gas surplus in Queensland.

The report forecasts a 27 PJ east coast gas surplus for next year if the LNG producers export all their currently uncontracted gas. It predicts a 90 PJ surplus if the LNG producers export only their currently anticipated spot sales.

However, while there should be sufficient gas to meet forecast demand across the east coast in 2024, the southern states are expected to experience a shortfall. Considerable transport and storage capacity will be required to deliver Queensland’s surplus gas to those states.

“The significant improvement in the supply and demand outlook for next year is largely due to a drop in the forecast demand for gas-fired electricity generation,” ACCC commissioner Anna Brakey said.

“Weather and electricity market conditions have a strong influence on the amount of gas-fired generation we need in the energy mix, so the demand outlook remains somewhat uncertain.”

“While the overall east coast is projected to have surplus gas next year, it is imperative that gas flows from Queensland to the southern states, and that there is enough storage for it,” Brakey said.

The report also emphasizes that the winter months will be challenging for gas markets as the supply-demand outlook in the third quarters of 2023 and 2024 is tight.

Availability of gas over the winter months will depend on whether liquefied natural gas producers commit additional gas to the domestic market via contracts or time swaps. However, the quarterly outlook could deteriorate further if there are unexpected events such as last year’s floods, which disrupted energy supply, the ACCC warned.

The Australian Petroleum Production & Exploration Association (Appea) said at the end of last week that Australia’s gas industry was delivering on its commitment, but noted the dire warnings that the southern states were increasingly reliant on Queensland and needed "substantial volumes of gas" in order to avoid shortfalls.

“The ACCC report highlights there is not enough gas being produced in New South Wales and Victoria where huge populations rely on gas while uncertain regulatory regimes and bans are stifling investment in new supply,” said Appea CEO Samantha McCulloch.

“Because of these bans, moratoriums and interventions, millions of New South Wales and Victorian gas users pay an extra $2/GJ whenever their state has to transport gas from Queensland.

“The best way to avoid shortfalls and put downward pressure on prices is to bring on new gas supply close to where it’s used because the cheapest gas is the gas closest to the customer.

“New supply such as the Santos Narrabri gas project, which could supply up to half the natural gas used in New South Wales homes and businesses, is needed as a matter of priority.”

McCulloch said the ACCC had also identified that regulatory uncertainty was still gripping the market and impacting contracting.

“In particular, there is ongoing uncertainty around how the market will operate under the Mandatory Code of Conduct.”

The Code, which will come into force in early July, effectively sees the government take on the responsibility of matching market demand with supply, through bilaterally negotiated agreements with gas producers.

“It remains unclear how the market will function following the introduction of the Code, with the real test being whether it can bring on new gas supply needed to meet demand and avoid forecast shortfalls,” McCulloch said.