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ACCC forecasts gas supply shortfalls

ACCC chair Rod Sims. Image: ACCC

The Australian Competition & Consumer Commission (ACCC) has released its gas inquiry January 2022 interim report, forecasting an increase in gas prices and supply shortfalls for southern states.

This is the twelfth interim report of the ACCC’s inquiry into gas supply arrangements in Australia.

Domestic gas prices offered to commercial and industrial users increased from $6-8/GJ in late 2020 to about $7-9.50 by mid-2021, with supply outlook for 2022 onwards looking “increasingly tight”, the latest report reveals.

Australia’s east coast spot market prices have been around $10-11/GJ in recent months as domestic users have been somewhat shielded from record high prices seen internationally.

European gas markets have been highly volatile, and as of 28 January the outlook for prices on the Asian LNG spot market in 2022 was over $36/GJ on average.

Across the east coast gas market, forecasts are that supply should meet demand this year, but there is the risk of a shortfall from 2026.

In the southern states, a shortfall of 10 PJ is expected this year and gas will need to be directed from the north to meet demand.

“There is a gas shortage forecast for Australia’s southern states from as soon as this year, which is likely to continue next year and beyond. Southern states will be reliant on gas from Queensland until additional supply from new sources comes on,” ACCC Chair Rod Sims said.

The report shows LNG producers are forecasting to take more gas out of the market this year than they expect to supply in.

“WE’re extremely concerned that LNG producers are currently forecasting to withdraw 27 PJ more gas than they expect to supply into the domestic market this year,” Sims said.

“The uncertain supply situation reinforces the importance of the Australian Government’s Heads of Agreement with LNG producers, which concludes on 1 January 2023.”

The ACCC recommended that governments implement a range of reforms to encourage greater diversity in suppliers and reduce the barriers faced by producers.

Click here to view the full January 2022 gas inquiry interim report. 

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