Australian LNG producers could need to commit to more gas for the local market due to a possible shortage

Due to a decrease in supply forecasts for next year the Australian competition watchdog stated on Friday that liquefied gas producers (LNG) may have to commit more gas to the domestic rather than export market.

According to the Australian Competition and Consumer Commission's quarterly report, the LNG supply surplus on Australia's east coast is expected to drop to 12 to 27 petajoules in the first quarter 2025. This is down from 26 to 35 petajoules forecasted in June.

The lower forecast is due to an increase in exports contracted in the third quarter of 2009. Australia was the largest LNG exporter in the world until the U.S. overtook it last year.

The report stated that if producers continue to export gas without a contract, they run the risk of not having enough gas to fill a storage facility, or to provide a buffer for an unexpected spike in demand or drop in production.

In a statement, ACCC Commissioner Anna Brakey stated that "LNG producers could be required to commit uncontracted LNG to the East Coast market by early 2025 in order to mitigate the risks of a domestic shortfall in gas during the year."

Brakey says producers should take into account the updated East Coast supply outlook before changing their cargo schedules or increasing exports.

Gas producers expect 15 PJ of gas to be available in the first quarter 2025. Gas storage facilities in Victoria, Australia will need up to 15 PJ before May 2025.

(source: Reuters)