Oz Energy Operator No Longer Forecasts Gas Shortfall

There is no longer a forecast shortfall of gas supply on Australia’s east coast in the near-term thanks in part to the Federal Government’s export control measures introduced last year and the under-construction Northern Territory-Queensland gas pipeline, the Australian Energy Market Operator (AEMO) said June 22.

“A change in international market dynamics, lower demand for gas-powered generation, new pipeline interconnections and the Federal Government’s Australian Domestic Gas Supply Mechanism (ADGSM) have delivered an improved outlook for Australia’s east-coast gas markets,” AEMO said.

“There are no gas supply gaps forecast in 2019, or in the short term, under expected conditions, although some field expansions are needed,” it said in its 2018 Gas Statement of Opportunities report.

A year earlier, AEMO toned down its warnings of a gas shortage on the country’s east coast, saying supply and demand were finely balanced, but the scales could be tipped by LNG exports, the level of domestic gas demand and the adequacy of coal supplies.

The new report flagged the connection between Australia’s domestic and international gas markets with minor changes in LNG exports providing additional supply to the east coast.

“The international oversupply of LNG capacity and the emerging spot Asia-Pacific LNG market means that international buyers are forecast to source less gas from Australian LNG producers in the short-term,” AEMO’s executive general manager for planning and forecasting David Swift said.

“Coupled with the current supply conditions on the east coast, this will mean that LNG producers will be able to provide up to eight petajoules more than previously expected to the domestic market, which is a minor, but favourable addition to the east coast’s dynamic supply demand balance,” he said.

The forecast reduction in LNG exports has also coincided with a seven petajoule net increase of east coast domestic production and a new Northern Gas Pipeline, which will be able to supply up to 90 terajoules of gas a day from the Northern Territory to Mount Isa in Queensland – linking the NT to the east coast market for the first time, it said.