ACCC looks at gas trigger
Regulators want the federal government to consider intervening in the gas market.
The Australian Competition and Consumer Commission (ACCC) has released an interim report from its inquiry into gas supply along the east coast, which warns that a gas shortage could lead to higher prices.
The ACCC points out that Australia has “relatively abundant gas resources”, but most is produced for export.
It warns that substantial volumes will be required for the domestic market next year to avoid a shortfall, but the companies that supply it are unlikely to forego international prices just to help the nation that it extracts gas from.
“The outlook for 2023 is very concerning and is likely to place further upward pressure on prices, which could result in some commercial and industrial users no longer being able to operate,” the report said.
“This is a significant deterioration in conditions relative to what we projected for 2022 at the same time last year and presents a real risk to Australia's energy security.”
It recommends that the government consider pulling the “gas trigger” to ensure there is enough domestic supply.
The gas trigger - formally known as the Australian Domestic Gas Security Mechanism (ADGSM) - is an emergency provision that allows the Resources Minister to directly intervene in the gas market and impose export controls to ensure there are adequate supplies for use in Australia.
The ACCC predicts a shortfall of 56 petajoules (PJ) next year, which is equivalent to about 10 per cent of domestic demand.
“This represents a further [almost tenfold] deterioration in conditions relative to what was forecast for 2022 at an equivalent time last year,” the report said.
The ACCC partly blames liquefied natural gas (LNG) exporters.
“LNG exporters are expected to contribute to the shortfall in 2023 by withdrawing 58 PJ more gas from the domestic market than they expect to supply into the market,” the report said.
The ACCC also proposes measures including sourcing additional gas from the Northern Territory and withdrawing gas from storage.