Australia sees more gas in 2023, but shortage to remain

There will be a shortfall of 30 PJ in Australia's east coast gas market in 2023 despite a rise in output, assuming LNG producers export all their uncontracted gas, according to the Australian Competition and Consumer Commission (ACCC).

This is an improvement from the commission's earlier forecast in July 2022 of a 56 PJ supply shortfall this year. The ACCC, in its gas inquiry report published 27 January, forecast that the east coast will produce 1,983 PJ of gas in 2023, while demand for gas this year will hit 2,013 PJ.

LNG producers in Australia's east coast are also expected to produce surplus gas of 146 PJ to meet their contractual commitments, of which the domestic market needs 30 PJ to avoid a shortfall, the ACCC said in an accompanying press statement.

The three LNG ventures in eastern Australia are the Shell-operated 8.5mn t/yr Queensland Curtis LNG (QCLNG) venture; the 7.8mn t/yr Gladstone LNG (GLNG) venture operated by independent Australian producer Santos, and the 9mn t/yr Australia Pacific LNG (APLNG) venture operated by ConocoPhillips and independent Australian producer Origin Energy.

"The east coast gas supply forecast for 2023 has improved, but the outlook remains uncertain as the LNG producers have not yet committed sufficient volumes under firm contracts to address the risk of a domestic shortfall," ACCC's Chair Gina Cass-Gottlieb said.

A significant gas shortfall is anticipated for the southern states of Australia. Gas production in the region is expected to exceed previous estimates by 52 PJ, but will only make up 12pc of forecasted southern demand for the year. This emphasises the continued need for producers in the north to continue supplying gas southwards, and highlights a problem should LNG producers continue to maximise exports in order to capitalise on higher export prices.

The front half-month ANEA price — the Argus assessment for spot LNG deliveries to northeast Asia — was assessed at $17.715/mn Btu for second-half February on 27 January, compared to assessments for the same half-month three years earlier at $3.393/mn Btu. Similarly, the AWX — the Argus assessment for month-ahead spot gas deliveries to Wallumbilla — was assessed at $16.167/mn Btu for February on 27 January, compared to $5.925/mn Btu in the week to 31 January 2020.

The ACCC introduced a price cap of A$12/GJ for gas sold and supplied by gas producers and their affiliates under gas sales agreements in the east coast and Northern Territory markets from mid-December. This was in response to concerns about the impact of the international energy crisis, which raised domestic gas prices to record levels last year.

By Subethira Ahrumugam