The ACCC’s March 2023 interim gas inquiry report has found there should be sufficient gas supply in the east coast gas market against forecast demand if LNG producers contract another 3PJ of gas in 2023. This represents an improvement of 27PJ since the previous forecast in January.
The interim report compiles supply data from producers and demand data based on LNG sales forecasts and AEMO forecasts of domestic gas demand to give an outlook for the remainder of 2023.
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“The available data shows that the outlook for the east coast gas market has improved and the market is not expected to face a material shortfall in 2023,” ACCC chair Gina Cass-Gottlieb said.
“If LNG producers commit an extra 3 PJ of gas to the domestic market, in addition to amounts already contracted, a shortfall will likely be avoided, but we remain concerned about adequacy of gas supply in the winter months.”
The improvement in the outlook since the ACCC’s previous report is due to an increase in forecast gas production, and the LNG producers committing some additional sales to the domestic market.
The ACCC’s first seasonal forecast is more mixed within the year, with an 11PJ domestic gas shortfall expected over winter, including a 26PJ shortfall in the southern states (Victoria and South Australia). Additional gas will be required from Queensland producers.
However, in the fourth quarter a surplus of 18PJ is expected across the east coast gas market.
“East coast LNG producers are expected to have uncontracted gas in each of the quarters of 2023 that could be used to prevent any shortfalls. However, they have firmly committed 45PJ of their previously uncontracted gas to LNG spot cargoes or additional sales, leaving less uncontracted gas,” Cass-Gottlieb said.
“If gas supply is brought forward, for example through gas swaps, or if LNG producers commit further gas to the domestic market, supply should be sufficient to meet demand in the third quarter of 2023.”
“We encourage producers to consider this information and amend their plans to ensure domestic demand will be met each quarter,” Cass-Gottlieb said.
“Some caution is recommended in relation to these revised forecasts. A risk remains that lower-than-expected gas supply, including from the Northern Territory or the Gippsland Basin, or higher than expected domestic demand, such as for gas powered generation could lead to lower available gas supply.”
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It should also be noted that this report relates to the near-term outlook for 2023 only. ACCC forecasts reported in the January 2023 interim report indicated shortfalls would be likely from 2027 if production was not expanded. The ACCC will continue to examine the long-term outlook in future reports.
The report provides information relevant to the government in assessing whether there is likely to be a supply shortfall for the purposes of the Australian Domestic Gas Security Mechanism.
