Eastern Australia at Risk of Imminent Natural Gas Shortages

Australia’s east coast faces natural gas shortages due to supply outages and higher gas-fired power demand amid cold weather and unusually low wind generation, the Australian energy regulator said this week.

The Australian Energy Market Operator (AEMO) warned the industry and market earlier this week that underground natural gas storage supply could be inadequate to meet demand in Australia’s winter.

“The supply of gas in all or part of the east coast gas system may be inadequate to meet demand,” AEMO said in a notice late on Wednesday carried by Reuters.

On Friday, the market regulator said that it notified earlier this week the gas industry of a potential risk to gas supply in parts of the East Coast due to the rapid decline in Iona underground gas storage inventory.

Under AEMO’s new East Coast Gas System functions, the regulator is required to notify industry participants when a gas supply risk or threat is identified.

“The reduction in gas storage levels is the result of disruptions to Longford production and high gas generation demand and as a result of unusually low wind generation and cold weather,” AEMO said on Friday.

Last month, industry group Australian Energy Producers said that Australia could face a natural gas shortage later this decade without action to boost domestic supply.

Australia’s energy producers and utilities are also calling on the government to support the existing natural gas-powered generation as a smooth market mechanism to move to growing shares of renewables in the electricity system. Australia has been closing coal-fired power generation and raising solar and wind power, but without enough baseload generation, it risks power shortfalls and blackouts, industry officials have warned.

In May, the Australian government said in its Future Gas Strategy that Australia would continue to back exploration and increased production of natural gas as the fuel would play a key role in the country’s transition to a net-zero economy by 2050 and help provide a reliable source of energy to Australia’s allies.

By Tsvetana Paraskova for Oilprice.com

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