The gas supply surplus in the Australian east coast gas market is forecast to be between 12 and 27 petajoules (PJ) in the first quarter of 2025, according to the ACCC's latest gas inquiry report.
The exact size of the surplus will largely depend on how much uncontracted gas is exported by Queensland LNG producers.
The forecast for the supply surplus has fallen from the predicted surplus of 26-35 PJ, in the ACCC's June 2024 gas report. This is largely due to an increase in contracted exports for this quarter and reflects the LNG producers' 're-shaping' of export cargoes between the domestic peak and off-peak gas demand periods.
The re-shaping of export volumes assists in meeting demand variations, when LNG producers may increase their export cargoes during periods of lower Australian demand for gas and may increase domestic supply during periods of peak demand in the Australian winter months.
"Re-shaping plays an important role in ensuring that there is enough gas for the domestic market during peak-demand periods. However, export re-shaping also leads to an increase or decrease in volumes of gas available to the domestic market, at different times of the year. It is important that there is sufficient supply to meet demand throughout the year," ACCC Commissioner Anna Brakey said.
Forecast gas supply surplus could help restock storage ahead of next winter and provide a buffer against other market risks
Iona, the key storage facility in Victoria, will require up to 15 PJ of gas injected before May 2025 to reach storage capacity levels comparable to previous years.
LNG producers currently expect to have 15 PJ of uncontracted gas available in the first quarter of 2025. The actual amount of uncontracted gas available is expected to be known soon as export commitments are finalised.
"LNG producers may need to commit uncontracted gas to the east coast market in early 2025 to mitigate the risk of a domestic gas shortfall during the year. In addition to helping to replenish gas stores, this gas would provide a buffer against any disruptions to production in the southern states and against higher than anticipated demand for gas-powered generation," Ms Brakey said.
"The amount of uncontracted gas the LNG producers commit to the domestic market should be based on updated data, including information about storage levels."
While the re-shaping of gas exports can help mitigate domestic gas shortfalls, LNG producers can help to increase certainty on domestic gas supply by considering the east coast gas outlook before increasing their export commitments or varying export cargo schedules.
"These steps, if put in place by all LNG producers, would help to better manage the inter-seasonal and near-term supply risks for the first quarter of next year," Ms Brakey said.
"However, predicted shortfalls from 2027 highlight the need for additional gas supply."
Chart 1: Quarterly supply demand outlook for quarter 1 2025 (PJ)
Source: ACCC analysis of data obtained from gas producers in July 2024 and of the domestic demand forecast (Step Change scenario) from AEMO, Gas Statement of Opportunities (GSOO), March 2024.
Note: Totals may not sum due to rounding. The quantity required to meet long-term LNG SPAs includes feed gas requirements (such as fuel) required to produce LNG.
Regional supply-demand forecasts indicate that Queensland supply will be 2PJ below demand if all uncontracted gas is exported, while the outlook for the southern states currently shows a 14 PJ supply surplus for this quarter.
Background
In 2017, the Australian Government directed the ACCC to conduct a wide-ranging inquiry into the supply of and demand for natural gas in Australia, and to publish regular information on the supply and pricing of gas. The ACCC will conduct the inquiry until 2030.
The September 2024 gas inquiry report contains information on the supply and demand outlook for the first quarter of 2025, as well as information on market risks and potential mitigation measures.
The ACCC's next full interim report is scheduled for December 2024.
