Australia’s energy producers endorsed a government strategy to boost natural gas development, but warned the country still faces new gas supply shortfalls this decade while markets remain volatile due to global conflicts.
Meg O’Neill, chair of the Australian Energy Producers, said the group welcomed the Future Gas Strategy released by the government earlier this month, which highlighted that new gas sources will be needed to meet both domestic and export demand during the energy transition.
This comes amid volatility in the oil and gas market due to the conflicts in Ukraine and the Middle East, she told an Australian gas industry conference on Tuesday.
“This is a challenge Australia faces this decade. As the Future Gas Strategy points out, without action, the east coast of Australia faces projected shortfalls by 2028 and the west coast by 2030,” O’Neill, who is also the CEO of Woodside Petroleum, said, adding that this could increase volatility and drive up prices for households and businesses.
“The best solution to a shortage is always supply, supply, supply… And we welcome acknowledgment in the Strategy that we’ll need the right regulatory settings to do so.”
The Future Gas Strategy from Australia, last year’s second-largest exporter of liquefied natural gas (LNG), came after the government faced criticism for its range of short-term measures to boost domestic gas supply and lower soaring energy prices, such as price caps and export limits from the country’s three east coast projects.
The measures prompted concern from the industry that they would hurt long-term energy investments.
O’Neill also discussed changes the government made to the country’s the Petroleum Resource Rent Tax (PRRT).
The tax reforms helps the gas industry make future investment decisions, but it does not address the ambiguity in the consultation process for offshore approvals, O’Neill said.
“Leaving this issue unresolved makes the timely development of new energy supply more difficult.”
The government has extended a review on the environmental management regime for offshore petroleum and greenhouse gas storage activities which includes a focus on clarifying consultation requirements for offshore activities.
“Legislation to complement outcomes of review did not pass the senate last week, as we prioritized worker safety provisions and ensuring certainty of petroleum resources and tax reforms,” Australia’s Minister for Resources Madeleine King told the conference.
The government is looking at ways to provide clarity and certainty for all stakeholders, she said, adding that it wanted to ensure genuine consultation is undertaken before any offshore activity commences.
“I want the offshore regulatory regime to remain fit for decarbonising the economy,” King said.
Australia produces more gas than it needs to meet its domestic demands, but most supply is contracted for export. The country shipped out 80.9 million metric tons of LNG in 2023, according to data and analytics group Kpler.
Its biggest customers are China, Japan and South Korea, which are also the world’s top three importers of the super-chilled fuel.
Australia’s energy market operator, however, said in March that the country’s southeast region faces the risk of gas shortages during next year’s winter months as demand may exceed supply, and called for urgent new investment to prevent any potential shortfall.
(Reporting by Emily Chow; Editing by Susan Fenton, Florence Tan and Christian Schmollinger)