Australia’s gas supply higher but risks remain: Aemo

There is still a risk of a gas supply shortfall in Australia from 2023-25, despite increased production capacity commitments for 2023 and with several key infrastructure projects on track for delivery, according to the Australian Energy Market Operator (Aemo).

Australia's gas supplies in 2023 have improved, partly because of Shell's plans to offer more gas for delivery into the domestic market from its Queensland-based gas company QGC, adding about 8PJ (214mn m³) of availability for 2023.

But total gas consumption in Australia is expected to be lower in 2023 at about 1,900PJ. This is a drop from the previous forecast of about 2,000PJ in 2022, according to its 2023 Gas Statement of Opportunities (GSOO). This is mainly because of lower forecasts for LNG exports and slightly reduced consumption for gas generation.

Upgrades to pipeline operator APA's Moomba-Sydney Pipeline (MSP) and the South West Queensland Pipeline (SWQP) will increase the system's capacity to deliver gas from Queensland to consumers in the southern regions of New South Wales (NSW), Australian Capital Territory, South Australia (SA), Victoria and Tasmania.

The SWQP connects to the Wallumbilla gas hub in southern Queensland, acting as a gateway between gas fields located in the north and southern regions where most of the peak seasonal demand is expected.

"To minimise shortfall risks, committed infrastructure and supply projects must be completed on time, while demand-side solutions, additional gas storage and pipeline development and liquefied natural gas import terminals could potentially play a role," said Aemo chief executive Daniel Westerman.

But this is in conflict with South Korean LNG development firm Energy Projects and Infrastructure Korea halting plans to build an LNG import terminal at Australia's Newcastle port in NSW, possibly because volatile spot LNG prices have made the project less economically viable.

There are four proposed LNG import terminals planned in Australia — the 130PJ/yr Port Kembla Energy Terminal in NSW, the 140PJ/yr Geelong LNG terminal in Victoria, the 60PJ/yr Port Adelaide LNG terminal in SA and the 260PJ/yr Port Phllip Bay LNG terminal in Victoria. All four terminals are expected to be operational by 2026 at the earliest.

Softer LNG spot prices may help discourage Queensland LNG producers from liquefying and exporting LNG supplies, keeping more gas for domestic users instead. The front half-month of the ANEA, the Argus assessment for spot LNG deliveries to northeast Asia, was last assessed at $13.915/mn Btu on 15 March, $1.70/mn Btu lower than a month earlier.

By Rou Urn Lee