Nation’s ‘absurd’ gas shortage while it’s a top exporter

The competition watchdog warns Australia may suffer domestic gas shortfalls by 2027.

The competition watchdog warns Australia may suffer domestic gas shortfalls by 2027. Photo: Getty

The warning of a looming gas shortage as a winter cold snap drives up heating demand on the east coast, has brought renewed calls for a crackdown on lucrative export markets.

The Australian Energy Market Operator (AEMO) admitted this week that it may have to intervene in the gas market to boost ailing supply levels, with a shortfall “risk” lasting until September 30.

That’s worrying for households, many of which rely on gas heating during a particularly cold winter on the east coast, with early morning temperatures falling to sub-zero in most states.

The threat has sparked familiar backlash from industry, which blames restrictions on gas fields, and has led Prime Minister Anthony Albanese to admit on Friday that “more gas” is needed.

Australia remains a top three gas producer globally and the real issue is the $65 billion LNG export market, experts say, which research has found ships gas overseas at the expense of locals.

Australia Institute principal advisor Matt Ogge said regulator fears of a shortage were “utterly absurd” given up to two-thirds of gas produced on the east coast is shipped overseas.

He accused the federal government of failing to stop fossil fuel giants from “price gouging” Australians by ensuring enough gas is kept onshore, even after a new industry code of conduct.

“The government has completely failed to solve this problem because it caved in immediately to the gas industry,” Ogge said.

“After the damning ACCC report a couple of years ago that showed gas companies were ripping off Australians, they promised to do something … but the measures turned out to be useless.”

Exports dwarf local demand

Victoria University professor Bruce Mountain said Australia has “plentiful gas”, but that LNG export terminals and lower than expected yields from the plants supplying them have caused issues.

“Export demand dwarfs local demand, add those two together and, relative to supply, we are short,” Mountain said.

The problem is likely to get worse, with gas expected to play a bigger role in base-load electricity generation in coming decades under Labor government plans for the energy transition away from fossil fuels to renewables.

“This situation is going to get worse and worse as coal generation leaves the market,” he said.

Experts have long complained about fossil fuel giants ripping off locals for gas, with damning ACCC data highlighting what former boss Rod Sims called a “broken market”.

That has included revelations that overseas users were at one point paying less for Australian gas than local users, and that far more gas is being sold overseas than is available at home.

Crackdown falls short?

The Albanese government attempted to crack down on the industry in 2022 and negotiated a new code of conduct with companies after unveiling temporary caps on domestic prices.

Resources Minister Madeline King has recently struck deals with gas giants that reserve more energy for the domestic market, but that effort hasn’t prevented AEMO’s new warning.

Ogge panned federal government efforts as woefully inadequate, accusing them of including massive loopholes in their deals with companies “that you could drive an LNG tanker through”.

“They fell for the obvious … game of the gas industry,” he said.

“They promise to develop a new field and use it for the domestic market, but all that means is they can export more gas from somewhere else.”

Mountain said that while there had been much “huff and puff” about preventing gas companies from exporting too much LNG, the market has largely continued to divert local energy overseas.

“The market is working as you might expect it to – gas is finding its way to the highest value usage, which turns out to be international customers,” he said.

Additional gas development in Australia, Mountain said, should be conditional on companies agreeing to reserve an adequate portion of the energy for domestic use.

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