Oil and Gas News

APPEA promises no gas shortfall

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The Australian Petroleum Production and Exploration Association (APPEA) has its reassured customers, as well as the wider public, in the wake of a potential gas shortfall in 2023.

The reassurance comes on the heels of the latest gas enquiry interim report from the Australian Competition and Consumer Commission (ACCC) which claims that, if no action is taken, the eastern states will experience a shortfall of 56 Petajoules (PJ) – approximately 10 per cent of the domestic demand. It is the largest supply shortfall the ACCC has forecast since the inquiry commenced in 2017.

The report was released with a number of recommendations from the ACCC for both the government and Australia’s producers and exporters of gas. Among these, the ACCC has recommended that the Minister for Resources formally determine whether 2023 will be a shortfall year. It has also been encouraged that LNG exporters and the Government work together to get more gas into the market in the second half of 2022 so that 2023 does not begin with a material supply shortfall.

The last forecast shortfall of this magnitude occurred in 2017, at which point the Government commenced the Australian Domestic Gas Security Mechanism (ADGSM), as well as forming an agreement with exporters that excess resources would be made available would be made available to the domestic market.

The ADGSM, among other things, allows the Minister for Resources to apply controls on the export of gas to avoid a shortfall.

In order to curb the potential shortfall on the east coast, the ACCC report states that additional volumes of gas will need to be produced from existing east coast gas fields already in operation and/or transported from the Northern Territory via the Northern Gas Pipeline.

These steps would only go a short way towards avoiding the shortfall. The greatest impact would likely come from the decision of gas exporters to withdraw reserves of gas from storage, and to divert gas into the domestic market, rather than exporting.

In response to the concern generated by the ACCC’s report, the CEA of the APGA Steve Davies has said that the report also details 167 PJ of uncontracted gas that is available for customers in 2023.

“Of course there are challenges in our energy markets, but this is the good kind of challenge” said Davies.

Acting Chief Executive of the APPEA Damien Dwyer has said that there has never been an actual shortfall in domestic gas in Australia.

“Gas customers can be assured supply will be adequate next year so households and businesses can continue uninterrupted… this is the ACCC signalling that action is needed, and the industry will act,” said Dwyer.