Media Release: ACCC confirms east coast gas supply surplus – but warns of southern state shortfall risk

The Australian Competition & Consumer Commission (ACCC) has confirmed the gas industry is fulfilling its commitment to domestic supply with a gas surplus forecast in the east coast gas market through to 2024.

But the ACCC warns of potential shortfalls in New South Wales and Victoria, where existing production continues to decline, increasing pressure on supply from Queensland.

The Australian Petroleum Production & Exploration Association (APPEA) today said the latest ACCC June 2023 Interim Gas Inquiry Report showed adequate supply that demonstrated the industry’s commitment to the domestic market and keeping the lights on along the east coast of Australia.

“Australia’s gas industry is delivering on its commitment to households and businesses,” APPEA Chief Executive Samantha McCulloch said.

However, the report’s warning that the southern states were increasingly reliant on Queensland and needed “substantial volumes of gas” to avoid shortfalls was the latest in a long line of warnings to Victoria and NSW.

Ms McCulloch said: “The ACCC report highlights there is not enough gas being produced in NSW and Victoria where huge populations rely on gas while uncertain regulatory regimes and bans are stifling investment in new supply.

“Because of these bans, moratoriums and interventions, millions of NSW 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 NSW homes and businesses, is needed as a matter of priority.”

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

The ACCC said: “Lack of contracting over [the previous 6 month] period may have been influenced by market participants’ preference for holding off on contracting in response to the uncertainty of further regulatory changes.”

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

The Code – expected to 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.

Ms McCulloch said: “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.”

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