15 Mar 2023

Media Release: Government strategy for new gas supply needed after more shortfall warnings

Australia’s oil and gas industry has called for federal and state governments to outline their plan to bring on new gas supply following two more independent reports warning of gas market shortfalls.

The Australian Petroleum Production & Exploration Association (APPEA) today said the Australian Energy Market Operator (AEMO) had provided yet more warnings to governments that current policies were not delivering the investment in new gas supply and infrastructure needed to keep the lights on.

AEMO analysis found gas demand would remain strong in Victoria while the state’s gas production went into steep decline, resulting in Victoria becoming increasingly dependent on Queensland gas to heat homes and power manufacturing.

But AEMO highlights that the “current investment environment for projects is challenging and highly uncertain”.

APPEA Chief Executive Samantha McCulloch said AEMO’s Gas State of Opportunities (GSSO) and the Victorian Gas Planning Report (VGPR) have put the Commonwealth and the Victorian and New South Wales governments on notice about the energy security risk for millions of homes and businesses on the eastern seaboard.

“Governments have received warning after warning from independent authorities and industry stakeholders about the need for investment in new supply,” Ms McCulloch said.

“AEMO makes it clear that the root cause of gas market shortfalls is inadequate supply and infrastructure. Ongoing market intervention and price regulation, permitting delays, and state-based barriers to new gas development are exacerbating the risk of shortfalls.

“We need a clear strategy from governments to promote new supply to avoid shortfalls and put downward pressure on prices rather than ad hoc interventions that do the opposite and undermine investment confidence.

“Millions of homes and businesses in Victoria and New South Wales are already paying an extra $2/GJ whenever gas is imported from Queensland – and these new reports are the latest to warn of shortfall risks that would risk energy security and put further upward pressure on prices if new gas supply is not secured.”

To view this media release as a PDF, please click here.