Australian East Coast Gas Shortage Greater than Earlier Anticipated
Putting further pressure on the Australian federal government to restrict LNG exports from projects based in Queensland, Australia Energy Market Operator (AEMO) reported September 25 that the gas supply situation remains tight in the eastern and south-eastern Australian markets.
“Based on the most recent information from industry, together with AEMO’s forecast demand, gas supply remains tight in eastern and south-eastern Australia in 2018 and 2019, and there remains a risk of a supply shortfall,” said AEMO CEO Audrey Zibelman.
AEMO 's report updates the 2017 Gas Statement of Opportunities to provide the latest domestic demand and supply market information, as requested by the then federal minister for resources and Northern Australia in late July 2017.
The energy market operator said it has used information from east coast gas producers who have updated forecasts of their best estimate of likely annual production. Similarly, Queensland LNG consortia have provided their best estimate of likely annual quantities of gas required for LNG exports.
It has projected shortfall risk for 2018 between 54 PJs and 107 PJs, and in 2019 between 48 PJs and 102 PJs. These projections are significantly higher than what AEMO predicted in March this year. The total projected demand for domestic gas is expected to be about 642 PJs in 2018, and 598 PJs in 2019.
“The results of AEMO’s recent analysis and the ever-tighter integration of the electricity and gas markets, together with the increasingly dynamic character of Australia’s energy system, suggest there is a need to look at reforms to improve predictability and stability in energy markets to the benefit of consumers,” said Zibelman.
Meanwhile, talking to reporters September 25, Australian prime minister Malcolm Turnbull said that there will not be any immediate export restrictions given the backdrop of the latest AEMO report. The federal government will discuss the reports with energy companies this week and remind them that if the shortage is not addressed, then exports will be restricted, ABC News reported September 25.
The federal government’s decision on whether it will limit exports next year is expected by the end of October. It targets the LNG exporters in Queensland, which are the only ones connected to the east coast market.
An LNG producer told NGW last week that Queensland gas produced from coalbeds could be diverted into the national grid, but that any reduction in imports would need approval from the purchaser and careful planning regarding the logistics of shipping contracts and so on. Given the plentiful supply of LNG into northeast Asia, having a local market could actually be beneficial to both counterparties, he said.
Shardul Sharma