Australia's east Coast could experience gas shortages during winter, warns regulator

The Australian Competition Regulator warned on Thursday that the East Coast could be left with a shortage of gas during its winter period spanning from July to September if LNG producers export all their gas not contracted.

In its quarterly update, the Australian Competition and Consumer Commission said that the east coast may face a shortage of 9 petajoules while the southern states might face a 40 PJ deficit.

Winter in Australia is a time of peak demand for gas due to the colder temperatures. Unexpected weather events and power plant failures can also increase the risk of shortages.

Due to the fact that most of Australia's natural gas is exported, energy shortages and rising household bills have been a major issue in the upcoming Australian election.

ACCC: The shortfall expected in southern states this year is double what it was last year. This is primarily due to declining production from the Gippsland Otway Cooper basins and higher demand forecast for gas-powered electric generation.

In a statement posted on the ACCC website, ACCC commissioner Anna Brakey stated that the regulator had recommended the government to work with LNG producers in order to secure the extra supply not currently committed for the domestic market.

Brakey stated that it is important for LNG producers to consider the domestic market before making significant changes to export volumes and schedules.

The east coast's supply-demand balance is expected to worsen over the next few decades, increasing the impact of LNG producer's decisions on the market.

In January, the regulator warned southern states that they might need to import more gas in the future to meet the demand. This highlighted the severity of the problem.

(source: Reuters)