Gas shortage: ACCC gives east coast all clear for 2025 but warns shortages are looming

Victoria and New South Wales have been urged by the energy industry to bring on new gas supply amid warnings of a shortage later this decade.

A fresh report from the Australian Competition and Consumer Commission on Friday has eased concerns about the east coast running out of gas this year, and signalled families are likely to feel modest relief on prices.

But the longer term picture for the market remains worrying.

“Our current projections indicate the potential for structural gas shortfalls on the east coast from 2027 unless supply increases or demand decreases,” ACCC Commissioner Anna Brakey said.

“There are significant barriers to new domestic gas supply becoming available due to lengthy regulatory approval processes, large upfront capital costs, an uncertain policy environment, and a lack of competition in upstream gas markets.”

Industry lobby group Australian Energy Producers seized on the warning to call for red tape to be slashed and new projects backed.

“The ACCC has again urged governments to address the regulatory approval delays, legal hurdles and ‘an uncertain policy environment’ delaying new gas projects and deterring investment,” AEP chief Samantha McCulloch said.

“At a time when Australians are facing cost-of-living pressures, governments must do everything they can to remove these barriers and ensure reliable and affordable energy for Australian homes and businesses.”

NSW and Victoria in particular needed to get local projects going, she said.

Victoria blocked development of new gas fields more than a decade ago and the State’s supply has run low with older assets in the Bass Strait reaching the end of their lives.

But the ban was partially unwound in 2022.

There’s been plenty of debate about gas projects across the Murray, too.

Santos has been pushing for years to develop the $3.6 billion Narrabri field in country NSW and could push the button in 2025.

The industry’s future has become a political football through the green energy transition. Backers argue the fuel is needed to supplement intermittent renewable power — replacing coal — and for use in industries which are harder to decarbonise.

Prime Minister Anthony Albanese repeated that message on Perth radio on Friday.

“We think that renewables with storage, with gas, are very important,” he said.

“Gas plays an important role in manufacturing, which is why we’re very supportive.“

Opponents point to gas exports producing almost 8 per cent of the nation’s carbon emissions, adding to climate change. They argue local production should flow to local buyers, rather than overseas.

Yet there was some relief for Canberra in the ACCC’s assessment.

The watchdog credited boosted output from Queensland and export giants pumping into local markets during high demand for the short-term glut.

The surplus of gas meant Federal Resources Minister Madeleine King did not need to activate the Australian Domestic Gas Security Mechanism to force exporters to supply the local market.

It’s a sharp change from just six months ago, when the Australian Energy Market Operator issued a red alert over winter. amid unexpected outages.

Ms King said the latest report showed the Government was securing supply needed for a reliable east coast market.

“Secure, reliable, and affordable gas supply is vital for Australian households, businesses and the renewable energy transition,” she said.

“Since coming to office, the Albanese Government has put an extra 600 petajoules of gas into the east coast market to keep downward pressure on prices.”