A recent analysis by EnergyQuest reveals a looming gas supply crisis for Australia’s eastern states, particularly Victoria and New South Wales.
The energy consultancy’s month-by-month study of the east coast and Northern Territory gas markets highlights severe supply issues that could leave consumers unable to source gas at any price within a few years.
The situation is especially critical during winter peak demand periods.
EnergyQuest’s report indicates that Victoria and NSW may soon become reliant on LNG imports to meet their seasonal needs.
A key factor in this impending crisis is the declining capacity of the Longford gas plant in Victoria. In 2023/24, Longford supplied 61 per cent of the total south-east gas production.
However, the plant has already lost a third of its peak capacity, dropping from 1,046 TJ/d in winter 2022 to 700 TJ/d post-winter 2024.
AEMO forecasts a further loss of 375 TJ/d by 2028, totaling a 721 TJ/d reduction.
The situation is exacerbated by several factors, including:
- Lack of exploration and infrastructure investment
- Government market interventions aimed at capping gas prices
- Investor risk aversion
- Environmental legal challenges
- Persistent gas demand is not decreasing as rapidly as the supply
Despite these challenges, the Australian LNG industry showed resilience in Q3 2024. National shipments increased slightly to 19.8 Mt, up from 19.6 Mt in Q2 2024.
LNG export revenue remained steady at $15.95 billion in Q3 2024, although down from $16.8 billion in Q3 2023 due to lower average prices.
Conventional east coast gas production in Q3 2024 saw its first quarterly increase in over two years, rising to 104.4 PJ, a 10.6 per cent increase compared to Q3 2023.
This improvement was largely due to the Otway Gas Project’s performance and efforts to slow production decline in the Bass Strait.
As Australia navigates these “uncharted energy frontiers,” the gas industry faces significant challenges in meeting future demand without substantial investment and policy support.
