Australia Forecasts Natural Gas Surplus for East Coast

The east coast of Australia will swing into a natural gas surplus later this year even if all LNG producers in the area export all the gas they have no long-term contracts for.

This is according to the Australian Competition and Consumer Commission, which noted this was the first time it expects a gas surplus for the eastern states.

Despite being a major LNG exporter, Australia has faced gas supply issues on its east coast, and in 2022, it introduced a price cap on natural gas for the domestic market. The cap was intended to mitigate the effects of the international tightening of gas supplies in 2022 that led to spiking prices.

The country’s government plans to retire a lot of its coal fleet by 2033 and to bet on renewable energy, but it faces power shortages if it rushes the energy transition, analysts and the Australian Energy Market Operator have warned.

Another warning came last month, from one of Australia’s biggest energy infrastructure operators, APA Group. The warning was about the possibility of gas shortages.

“Without gas, we’re going to see major disruptions to energy security and costs will increase. Without gas, we’ll be keeping the coal and diesel generators going for a long, long time,” the chief executive of APA Group said at an industry conference in March.

At the same event, Adam Watson went on to note that several provinces are extending the lives of their coal power plants instead of switching to gas because there is not enough gas—betraying the purpose of the energy transition.

The ACCC added a warning of its own in its otherwise optimistic report on gas demand expectations. “A small surplus for the peak demand winter months is positive, but we would caution that the outlook is subject to some uncertainty in both supply and demand,” it said.

Yet it went on to add that unforeseen events such as storms that swept across Victoria in February could lead to coal power plant outages, leading to a surge in the demand for gas for generation.

By Irina Slav for Oilprice.com

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