Shortage warning prompts King to fire up at gas giants

FEDERAL Resources Minister Madeleine King says a report from the consumer watchdog is “damning” of gas exporters after it found they were not engaging locally “in the spirit” of the heads of agreement.

The Australian Competition and Consumer Commission’s gas inquiry 2017-2025 interim report warns businesses could shut down and there could be a record shortage of gas in the southern states next year unless something is done.

The report notes that about 70 per cent of exporters sell their excess gas overseas to spot markets, but they will be expected to contribute to the domestic market to fight the projected shortfall.

The report notes Australia has “relatively abundant gas resources” but a large amount is sent overseas for higher prices.

“We remain concerned that some (liquefied) natural gas LNG exporters are not engaging with the domestic market in the spirit in which the heads of agreement was signed,” the report says.

“LNG producers will need to divert a significant proportion of their excess gas into the domestic market.”

Ms King said gas producers “know” the report is “damning for them”.

“The ACCC report is damning, no doubt about it,” she said. “It sets out patterns and instances of behaviour that are clearly not acceptable in an environment where we do have an international and domestic energy supply crisis.”

The ACCC described the outlook for 2023 as “very concerning” with gas prices likely to increase.

The ACCC forecast a 56 petajoule shortfall in east coast gas supply for 2023, a figure it called a “significant risk to energy security” that was equivalent to 10 per cent of expected domestic demand.

This shortfall will mainly affect NSW, Victoria, South Australia, the ACT and Tasmania, where “resources have been diminishing for some time”, though Queensland may also be affected.

The forecast was the largest projected supply shortfall since 2017, and was almost 10 times worse than what was forecast for 2022 at this time last year.

The ACCC recommended that the federal government activate the first step of the “gas trigger” (Australian Domestic Gas Security Mechanism) and work with exporters to ensure more gas will be available domestically.

“This is a significant deterioration in conditions relative to what we projected for 2022 at the same time last year and presents a real risk to Australia‘s energy security,” the report says. “These effects are likely to be felt most acutely by gas users in the southern states, but given the interconnected nature of the market could also affect users in Queensland.

“(The ACCC) recommends that the Australian Government … work with LNG exporters to supply more gas into the domestic market.”

But the Australian Petroleum Production and Exploration Association assured the public there would be enough gas.

“Supply will be adequate next year, so households and businesses can continue uninterrupted,” APPEA acting chief executive Damian Dwyer said.