Australia’s gas production is projected to quadruple, reaching over 8000 petajoules in 2034–35, driven by the growth of our liquefied natural gas (LNG) export industry. There is also potential for substantial growth in domestic demand.
By the end of this decade, Australia may rival Qatar as the world’s largest exporter of LNG. Around 70% of the world’s LNG capacity currently under construction is in Australia, and the benefits of those projects will continue for decades.
Along with the development of major new gas resources, this is driving important changes in Australia’s eastern and western gas markets. While there is sufficient gas to meet long-term domestic and export needs, there are likely to be short- to medium-term transitional pressures in the eastern market until project start-up risks diminish and new trading dynamics are established. These transitional pressures will manifest in tighter supply and higher prices.
Security of supply to consumers is vital, and maintaining open market arrangements will be critical to allow supply to respond flexibly to changing circumstances.
In this context, the Australian Government will work with relevant jurisdictions, gas market bodies and industry to:
- address impediments to the development of our onshore and offshore gas resources
- identify ways to improve market information
- consider the merits of reviewing pipeline capacity trading, including potential mechanisms for utilising unused (but contracted) capacity
- explore a development path for establishing a gas supply hub market that expands upstream trading opportunities and allows gas and capacity to be traded separately
- monitor gas market conditions, particularly the emergence of potential impediments to adequate supply, and work with the gas supply industry to identify ways to improve market liquidity.
The Australian Government does not support calls for market interventions such as a reservation policy. Such measures should be a matter of last resort, undertaken only where there is clear evidence of market failure. Currently, there is no compelling evidence to support this.
Our gas markets have provided reliable and competitively priced gas, which has supported the development of downstream industries and greater availability of gas in homes and for power generation.
The emergence of transitional market pressures may particularly affect gas-intensive businesses. Responses to those pressures should be consistent with the development of more efficient and flexible gas markets, rather than impose distortionary or constrictive regulation. There are opportunities, which the Australian Government is pursuing through the Standing Council on Energy and Resources, to improve information flows and trading opportunities. The government also encourages a broader conversation on long-term objectives and directions for our gas markets to guide nearer term development directions.
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