Page 11 - AsianOil Week 07

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Australia’s gas supply outlook still uncertain
The country’s competition watchdog has released a report warning that the East Coast gas market may experience shortages in the long term
COMMENTARY
WHAT:
The ACCC has found that a supply shortfall in 2020 is unlikely.
WHY:
A rising volume of local gas is being directed towards the local market.
WHAT NEXT:
Gas supplies may fall short towards the end of the 2021-2031 forecast period.
THE Australian Competition and Consumer Commission’s (ACCC) new report on the East Coast natural gas market calls not just for greater upstream investment but also raises some con- cerns over supply diversity.
e commissiZon’s Gas Inquiry 2017-2025 Interim Report, which was published on Feb- ruary 18, highlighted concerns over the long- term supply outlook of the country’s eastern and southern states. It noted that an improved short- term outlook had failed to deliver lower gas prices, forcing several commercial and industrial users out of business.
Short-term success
e commission said the short-term gas supply outlook had improved in the six months since its last analysis of the domestic market.
e ACCC’s July 2019 report had found that the likelihood of a supply shortfall in 2020 was lower than it had been in 2019. An improving supply outlook was replicated in the commis- sion’s latest review, with the report noting that gas producers had increased their expected out- put by 6 petajoules (156.29mn cubic metres). Projected supply for 2020 now stands at 2,025 PJ (52.75bn cubic metres) while demand is forecast to reach 1,831 PJ (47.69 bcm).
e ACCC said that since its last report, the
gas contracted to East Coast consumers had risen, with LNG producers contracting an additional 33 PJ (859.6 mcm) to domestic buyers.
is uptick could see LNG producers deliver 209 PJ (5.44 bcm) in aggregate to the domestic market this year, compared to the 202 PJ (5.26 bcm) they were expected to take out. e ACCC said the rise in contracted volumes for the domestic market reversed the situation reported in July 2019, when LNG exporters were expected to run at a de cit to the local market.
LNG producers, meanwhile, are also expected to have 138 PJ (3.59 bcm) of gas avail- able for sale either via spot exports or the local market. Given LNG exporters’ agreement with the central government in 2018 to o er excess gas production to local buyers rst, the ACCC expects this supply to act as an additional bu er for the domestic market.
e supply-demand balance for the coun- try’s southern states was largely unchanged from six months earlier and remained tight with unknowns – such as the level of Cooper Basin gas production that was shipped to Queensland rather than southern markets – representing possible challenges to local supply scenarios.
Although the Cooper Basin will contribute to southern states’ supply this year, the ACCC said swap agreements could rule this out in the future.
Week 07 19•February•2020 w w w. N E W S B A S E . c o m P11