Manufacturers demand more gas as new supply offers stall

“I think a few of them [LNG exporters] were a bit wary– they were waiting to see what the new rules were,” Richards said. “But having said that, they should be out there offering gas.”

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Global energy major Shell last week ended the freeze on new contracts, notifying customers it would make an additional 8 petajoules of wholesale gas supply available for 2023 via its Queensland gas business, QGC, in compliance with the government’s $12 price cap.

AGL, one of the largest Australian gas retailers, said it believed gas shortfalls were likely in 2023 and was considering the terms of Shell’s offer to sell additional supplies.

“With a decline in domestic production, we are also expecting a shortfall in the gas market,” a company spokesperson said.

“AGL is currently reviewing the terms of the expressions-of-interest process conducted by Shell/QGC for the sale of $12-a-gigajule gas,” AGL’s spokesperson said.

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The Australian Petroleum Production and Exploration Association (APPEA), an industry group representing large gas producers, said the ACCC’s report showed the need to develop more sources of supply, especially in Australia’s southern states, where years of restrictive policies and onshore drilling moratoriums have stood on the way of new gas projects to replace rapidly diminishing output from legacy gas fields in Bass Strait and elsewhere.

“The report … shows demand for gas in southern states is expected to exceed production by 52 petajoules from gas sources located in southern states, reinforcing the need for Victoria and NSW to develop their own resources, rather than rely on Queensland to do all the heavy lifting” APPEA chief executive Samantha McCulloch said.

The Energy Users Association of Australia said the report had reaffirmed the need for the emergency price cap and a mandatory code of conduct for the gas industry to ensure a “fair and balanced domestic gas market for all participants.”

“The ACCC report identifies that the vast majority of contracted and uncontracted gas reserves are in a cost range of between $5 a gigajoule to $10 a gigajoule, meaning even with an emergency price cap of $12 a gigajoule, most gas will be sold at a healthy margin and no gas will be sold at a loss,” Richards said.

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