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Eastern Australia is once again under threat of a gas shortage in case LNG producers decide to sell all of their uncontracted gas abroad, a watchdog has warned.
“The east coast gas supply forecast for 2023 has improved, but the outlook remains uncertain as the LNG producers haven’t yet committed sufficient volume under firm contracts to address the risk of a domestic shortfall,” the chair of the Australian Competition & Consumer Commission, Gina Cass-Gottlieb said today, as quoted by Reuters.
Australian LNG producers enjoyed record revenues last year thanks to Europe’s switch from pipeline gas to LNG, even though Australia did not become a large exporter to the continent. However, as Europe drew cargos that would have otherwise gone to Asia, the latter became an even bigger buyer of Australian liquefied gas.
Indeed, one LNG cargo was shipped from Australia to Germany despite the added costs of the long journey. The buyer was freshly nationalized Uniper, and the seller was Woodside.
It is because of this export boom that the ACCC has been warning of shortages. Last year, in August, the watchdog also issued a warning that unless the government steps in and limits exports, the east coast would plunge into a gas shortage.
In its latest warning, the Australian Competition & Consumer Commission noted that there are three LNG producers operating in eastern Australia, and they have been net withdrawers of gas from the domestic market for the last two years, and this has raised the danger of a shortage.
In the meantime, the Australian government has introduced price caps on domestic gas in a bid to ease the burden on households and businesses. The gas industry immediately slammed the move as unwise, noting that it would affect future investment decisions, and not in a favorable way. One company, Senex Energy, suspended a gas investment project days after the cap was announced.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.