Australia’s gas market under scrutiny amid supply concerns

Australia’s gas market is facing increased scrutiny as concerns grow over potential supply shortfalls, rising prices, and long-term energy security.

With demand still strong across residential, commercial, and industrial sectors, the federal government is taking urgent steps to review and potentially intervene in the market to ensure reliability and affordability.

East coast gas supply at risk

One of the most pressing issues is the projected shortfall of gas on Australia’s east coast, which could emerge as early as late 2025. The Australian Competition and Consumer Commission (ACCC) and energy experts have warned that declining reserves in southern states, such as Victoria and South Australia, may not be enough to meet demand unless new sources come online quickly.

This looming gap in supply has prompted the federal government to launch a comprehensive Gas Market Review. The review is exploring ways to boost domestic supply, improve market transparency, and prevent sharp price increases for Australian households and businesses.

Balancing domestic needs with exports

Australia is one of the world’s largest exporters of liquefied natural gas (LNG), but that success comes with challenges. A significant portion of the gas extracted domestically is shipped overseas under long-term contracts. This has raised concerns about whether enough gas is being reserved for domestic use, particularly during times of high demand or supply disruption.

The federal government is considering new policy tools, such as strengthening the Australian Domestic Gas Security Mechanism (ADGSM), to ensure more gas is available locally when needed.

Long-term transition and short-term realities

While the transition to renewable energy continues, gas remains a critical part of Australia’s energy mix. It provides firming power for electricity grids, supports manufacturing industries, and is widely used in homes for cooking and heating.

However, without coordinated action, there’s a risk of increased volatility in the market. Ensuring stable supply, competitive pricing, and a smooth transition to cleaner alternatives are key priorities for policymakers.

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