ACCC report boosts confidence in Australia’s gas industry
With a number of junior and major petroleum companies increasing their output, Australia’s gas industry says a new Australian Competition & Consumer Commission (ACCC) report has confirmed it is doing its bit to ensure the east coast of the nation will be well supplied into the future.
The ACCC’s September 2023 interim gas inquiry report found that Australia’s east coast gas market should have a surplus of 1.4 petajoule (PJ) in the first quarter of 2024, even if the LNG producers export all their uncontracted gas.
With new players such as Vintage Energy (ASX: VEN) recently adding further gas supplies to the market, the gas industry says it is fulfilling its commitment to domestic supply.
Outlook could worsen
However, the recently named Australian Energy Producers lobby group (formerly APPEA) said the ACCC report also warned that “there remains a risk that the outlook could worsen, particularly from higher-than-expected gas demand”.
Australian Energy Producers chief executive, Samantha McCulloch, said the report showed the gas industry was delivering for Australian households and businesses but that there was a continuing need for governments to enable new gas supply.
“The ACCC has confirmed surpluses in the east coast gas market through to 2024, highlighting the gas industry’s commitment to ensure domestic supply to Australian households and businesses is being delivered,” Ms McCulloch said.
“Natural gas plays a critical role in the economy. It is keeping the lights on and powering major industries such as manufacturing where gas supplies around 40% of the energy used.”
Surplus gas available
The ACCC forecast that on a regional basis, Australia’s southern states will have an estimated three petajoules surplus to meet local demand. However, Queensland will require about one petajoule of additional gas to meet its local demand if the LNG producers export all their uncontracted gas.
“We expect gas swap arrangements will play an important role in balancing gas supply needs across 2024,” ACCC commissioner Anna Brakey said.
“The LNG producers have entered into gas swap arrangements with other gas businesses to access additional gas for export during the summer months. Under these arrangements, they will then return the gas to market in higher demand periods, such as the winter months.”
Long term outlook remains cloudy
Australian Energy Producers noted that while the ACCC has provided a positive outlook for the next six months, the report did not update the long-term outlook with forecast shortfalls still likely from 2027 unless production is expanded.
“The ACCC is clearly still aware of the risks to the market of unexpected surges in gas demand if coal or renewable generation is unavailable as well as the need for new gas supply to reduce the risks of shortfalls in coming years,” Ms McCulloch said.
“New gas supply is urgently needed and can put downward pressure on prices, reduce emissions by replacing coal and deliver substantial economic benefits to Australians.”
“Investment is particularly needed in the southern states of NSW and Victoria where huge populations rely on gas.”
New supplies coming
The addition of new gas from operations such as Vintage Energy’s Odin and Vali gas fields in the Cooper Basin and increased production from other areas continue to boost gas supply numbers.
Recent investments in key pipeline infrastructure have also made it easier to transport gas between northern and southern states, and additional upgrades currently underway are expected to be completed by winter next year.
Central Petroleum (ASX: CTP) and its Mereenie gas partners announced today that they have agreed to extend a two year gas supply agreement (GSA) with South32 (ASX: S32) by an additional 12 months
Gas supplied under the GSA will be aggregated in order to deliver up to 1.46 petajoules of gas to South32 in 2025.
Central said it expects to bring further gas to market, having increased its production capacity through the commissioning of the Palm Valley 12 well in November 2022 and recent well recompletions at Mereenie.