Australia Dials Back Forecast for Natural Gas Shortfall in South

Australia’s east coast gas market is expected to have a surplus of between 69 and 110 petajoules in 2025, according to the latest report from the Australian Competition and Consumer Commission (ACCC). This forecast comes as a relief to the southern regions, which have been grappling with the risk of gas supply shortfalls, particularly during the winter months. The extended operation of the Eraring Power Station has played a crucial role in reducing this risk, but the long-term outlook remains uncertain.

The ACCC’s report highlights that while there is an overall surplus forecasted for 2025, there is still a risk of a shortfall in the third quarter when demand for energy is typically higher due to heating needs. The extended operation of the Eraring Power Station has mitigated this risk to some extent, but if a shortfall does occur, LNG producers will need to commit additional gas to the domestic market to ensure sufficient supply.

The variability in gas demand, influenced by weather events and electricity network outages, poses significant challenges to the reliability of gas supply. The report emphasizes the need for sufficient gas pipeline and storage capacity to handle this variability. This includes ensuring that there is adequate infrastructure to transport gas from Queensland to southern jurisdictions, such as the Australian Capital Territory, New South Wales, South Australia, Tasmania, and Victoria, to avoid local shortfalls in both the second and third quarters of 2025.



The report also notes that the outlook for 2025 is sensitive to several factors, including variable demand for gas-powered generation induced by weather events and unscheduled maintenance and outages in the electricity network. The variability of demand for gas and reliance on interstate transfers of gas emphasize the need for sufficient gas pipeline and storage capacity, in addition to gas production.

Looking ahead, the forecasted surplus in 2025 may not be sustained in the coming years. The report indicates that the east coast gas market may experience gas supply shortfalls as early as 2027 unless new sources of supply are made available. This predicted shortfall is likely to take place one year earlier than what previous reports have forecast, with the extended operation of Eraring Power Station improving the outlook for 2027 but not altering the fundamental trajectory of supply. The forecast of earlier emerging risks is due to an increase in forecast gas consumption for gas power generation as well as a decrease in forecast supply due to delays in new gas projects and production problems in legacy gas fields.

The southern states are expected to rely on gas transported from Queensland for the foreseeable future unless new sources of supply are made available. This reliance on interstate transfers of gas emphasizes the need for sufficient gas pipeline and storage capacity, in addition to gas production. The report found that "the southern states are expected to rely on gas transported from Queensland for the foreseeable future unless new sources of supply are made available."



In conclusion, while the extended operation of the Eraring Power Station provides some short-term relief to the gas supply-demand balance in the southern regions, it does not address the underlying issues of gas supply and infrastructure that will be crucial for long-term energy security in these areas. The variability in gas demand, influenced by weather events and electricity network outages, poses significant challenges to the reliability of gas supply. However, by enhancing gas pipeline and storage capacity, improving forecasting and planning, increasing flexibility in supply arrangements, and investing in renewable energy sources, these risks can be effectively mitigated.