PERTH (miningweekly.com) – The Australian Competition and Consumer Commission (ACCC) this week said that while it was unlikely that the east coast of Australia would experience a gas shortfall in 2020, supply remained tight and more development and production was needed.

In its seventh Gas Inquiry Report, the ACCC found that a gas supply shortfall in the east coast gas market in 2020 is less likely than it was for 2019, mainly because east coast producers expect to produce more gas, about 113 PJ, than in 2019.

In addition, lower gas consumption is expected for power generation during 2020, according to forecasts by the Australian Energy Market Operator (AEMO).

“The supply-demand balance in the southern states remains tight, and there is uncertainty about how much gas will actually be used for gas power generation and how much of the gas produced in the south, particularly the Cooper basin, will flow to Queensland,” ACCC chairperson Rod Sims said.

“What would most relieve price pressures is developing new low-cost supply in the southern states.”

The Australian Petroleum Production and Exploration Association (Appea) said that the ACCC report once again confirmed that the actions taken by Australia’s oil and gas industry to bring more natural gas into the domestic market are working.

Appea CEO Andrew McConville said the ACCC’s July report highlighted the industry has increased the flow of gas to the east coast market but southern states continue to face higher prices due to a lack of local supply.

This follows similar findings by the AEMO when releasing its 2019 Gas Statement of Opportunities in March this year.

“The ACCC has highlighted that prices have eased since early 2017, with most price offers now stable in the range of A$10 to A$12/GJ. Producers, particularly liquefied natural gas (LNG) producers, have made significant volumes of additional gas available to the domestic market,” McConville said.

He added that the report again raised the ACCC’s concern that customers in New South Wales and Victoria continue to pay more for gas because of state government restrictions on developing local gas resources, with Sims adding that price relief was most likely to come through the development of new low-cost supply in the southern states.

“The oil and gas industry has announced billions of dollars in new investment to bring more gas into the market, supporting both domestic gas consumption and export projects that are underpinning much of Australia’s economic growth,” McConville said.

In the past two-and-a-half years, there have been announcements from Arrow Energy, Shell Australia, Cooper Energy, Senex, Strike Energy, Gladstone LNG, Australia Pacific LNG, Origin Energy, Santos and Westside Corporation to provide new supply in various parts of eastern Australia’s gas market.

“The best way to place downward pressure on natural gas prices is to increase production. This should be the ongoing focus of all involved in this debate – governments and industry,” McConville concluded.