Australia’s east coast is facing volatile gas supplies in the third quarter of 2026, depending on how much gas is exported by liquid natural gas (LNG) producers, according to the competition watchdog.
The Australian Competition and Consumer Commission’s (ACCC) latest gas inquiry report reveals that the east coast gas market is predicted to have a supply-demand balance ranging from a 3 petajoule (PJ) surplus to a 12 PJ shortfall, depending largely on the volume of uncontracted gas diverted to international markets by Queensland LNG producers.
The outlook is particularly concerning for Victoria, New South Wales, South Australia, Tasmania, and the Australian Capital Territory. The ACCC anticipates these states and territories will require additional gas every month between April and September to avoid energy insecurity.
To bridge this gap, the market will rely on the Iona Underground Gas Storage facility in Melbourne’s west. While Iona is currently on track to reach maximum capacity by May, its ability to sustain the grid depends on how rapidly it is drawn down during the autumn months.
“We project the southern states will have a supply gap of 16 PJ in July 2026 alone, so it is important that the Iona storage facility reaches its maximum capacity ahead of winter,” ACCC Chair Gina Cass-Gottlieb said.
“We anticipate that the market may also need support from LNG producers to meet demand, which would also ease pressure on storage facilities.”
The report also highlights a rise in wholesale costs. Contract prices offered by producers for 2026 supply rose by 4 per cent late last year to an average of AU$13.55 per gigajoule (GJ). Retailer offers were slightly higher, averaging AU$13.93/GJ, an increase of 3 per cent over the same period.
While these prices remain well below the extreme peaks of 2022-23, the ACCC is closely monitoring the escalating conflict in the Middle East.
Global instability has the potential to spike international LNG prices, which could incentivise Australian producers to increase exports or trigger price-linkage mechanisms in domestic contracts.
“Higher international LNG prices may also incentivise higher exports from Australia and affect spot gas prices,” Cass-Gottlieb warned, though she noted that many domestic buyers are currently shielded by existing fixed-price portfolios.
“However, we know the situation is continuing to evolve, and we will be closely monitoring the impact of the conflict in the Middle East on domestic natural gas prices and the supply outlook.”
