Australia’s east coast gas market is forecast to have a supply surplus overall in 2025, according to the latest report from the Australian Competition and Consumer Commission (ACCC). However, the report highlights a potential risk of a shortfall during the peak demand period of the third quarter (winter), requiring action from Queensland’s LNG producers.
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The ACCC’s June 2024 interim report on the Gas Inquiry provides a snapshot of market conditions and forecasts. Key takeaways include a projected 2025 surplus between 69 and 110 petajoules if LNG producers export all uncontracted gas, but a critical need for gas to flow from Queensland to southern states to prevent regional shortfalls, particularly in Q3. Looking further ahead, the outlook points to potential supply shortfalls emerging earlier than previously anticipated, possibly as soon as 2027.
Navigating the 2025 Gas Landscape
The forecast for 2025 suggests an overall balance or slight surplus, a situation influenced by factors like the extended operation of Eraring Power Station, which reduces some gas-fired power generation needs. Despite this, the ACCC report flags the significant risk of a supply gap during the winter months when heating demand peaks.
Addressing this potential Q3 shortfall would necessitate Queensland’s LNG producers redirecting a limited amount of uncontracted gas from export to the domestic market. Furthermore, ensuring sufficient supply in southern jurisdictions (ACT, NSW, SA, Tas, Vic) throughout the second and third quarters of 2025 will rely heavily on gas being transported south from Queensland.
The market’s sensitivity remains high, influenced by unpredictable factors like weather-driven energy demand spikes and unforeseen outages in the electricity grid. This variability underscores the ongoing importance of not just gas production, but also robust gas pipeline and storage infrastructure to manage supply fluctuations.
The Impact of the Gas Market Code
The ACCC’s latest report covers the initial four months of the Gas Market Code’s full implementation, a period characterised by relatively quiet market activity. ACCC Commissioner Anna Brakey noted an apparent increase in gas contracting activity between producers and buyers for 2024 and 2025 since conditional exemptions from the Code were introduced.
However, the report indicates that it’s too early to draw definitive conclusions about the Code’s full impact on the market, particularly regarding its effect on prices. Most gas supplied in 2024–25 is expected to fall outside the Code’s pricing regulations. While additional supply secured via conditional Ministerial exemptions might offer some relief in the near term, much of the potential volume from these exemptions is not expected to become available until 2026 or later.
Recent Price Trends
The report highlights a continued decline in east coast gas market prices from their peak levels in mid-2022. Prices are now closer to those observed in early 2022.
Producer prices offered for 2024 supply saw a two per cent dip between August and December 2023, settling at $14.32 per gigajoule. Retailer prices for 2024 supply experienced a more significant drop of 16 per cent over the same period, reaching $16.51 per gigajoule.
Forecast supply-demand balance for Australia's east coast gas market in 2025 showing potential surplus and Q3 risk
Long-Term Supply Outlook: Risks Emerging Sooner
Looking beyond 2026, the ACCC’s forecast presents a more challenging picture. The report suggests the east coast gas market could face supply shortfalls as early as 2027, a year sooner than projected in previous reports.
This accelerated risk is attributed primarily to two factors: an increase in the forecast demand for gas used in power generation and a decrease in forecast supply due to delays in new gas development projects and production issues in established gas fields.
The southern states are expected to remain reliant on gas supply transported from Queensland for the foreseeable future unless significant new sources come online. Even Queensland is projected to require new supply sources starting from 2029.
The potential impact of volumes under the Gas Market Code exemptions framework is significant. If all projects identified in conditional Ministerial exemptions proceed and reach their potential, this could push the emergence of east coast shortfalls back to 2028.
ACCC Commissioner Anna Brakey pointed to the expiry of long-term LNG export contracts from the mid-2030s as a key opportunity. This timeframe allows for critical policy discussions focused on securing a more efficient and reliable domestic gas supply alongside ongoing gas exports.
Projected natural gas supply and demand trends in Australia's southern states from 2026 to 2036
Background to the Inquiry
The ACCC’s involvement in monitoring the Australian gas market stems from a 2017 government directive to conduct a wide-ranging inquiry into gas supply and demand and to publish regular updates. The inquiry’s term has been extended multiple times and is currently set to continue until 2030. The Gas Market Code, which came into full effect in September 2023 after a transition period, aims to enhance market transparency, improve negotiating conditions for buyers and sellers, and includes certain pricing requirements.
The findings in the June 2024 report are based on data gathered up to January 2024 from gas producers, retailers, and the Australian Energy Market Operator (AEMO). Future market and policy developments may influence actual outcomes. The next supply-demand outlook update from the ACCC is scheduled for September 2024, with the next full interim report expected in December 2024. You can access the full report and learn more about the ACCC’s ongoing inquiry via their website.
What This Means
The ACCC’s latest report offers a mixed view of the east coast gas market. While 2025 appears manageable overall, the looming winter quarter presents a clear risk requiring potential intervention from LNG exporters and continued reliance on interstate flows. The reported decline in prices since mid-2022 is a positive sign for consumers and businesses.
However, the accelerated forecast for long-term supply shortfalls beginning potentially as early as 2027 is a significant warning. This highlights the pressing need for investment in new gas supply projects, improved infrastructure, and strategic policy considerations to ensure energy security and price stability in the years ahead. Market participants and policymakers will be closely watching future ACCC reports for updates on these critical supply dynamics and the evolving impact of the Gas Market Code.
For more detailed information, refer to the ACCC’s official publications on their ongoing gas inquiry.
