I have a sneaking suspicion, that there will be a hunt for small...

I have a sneaking suspicion, that there will be a hunt for small producers by the big players over the next 12 months. Acquisitions will be the name of the game.

ACCC forecasts 2023 east coast gas shortage, despite federal government intervention - ABC News

ACCC forecasts 2023 east coast gas shortage, despite federal governmentintervention

Australia's competition watchdog has warned east coast households andbusinesses are facing a potential gas shortage this year, despite efforts bythe federal government to safeguard supplies.

Key points:

• The east coast reportedly faces a gas shortage of 30 petajoules, about 5 per cent of its supplies, in 2023
• The competition watchdog says LNG producers have enough uncontracted gas to prevent domestic shortfall
• It comes amid efforts by the federal government to cap gas prices and shield consumers

The Australian Competition and Consumer Commission (ACCC) onFriday released its latest report of the country's gas market, findingthat users were still struggling to secure enough supplies to meet demand.

In a shot across the bow for gas producers, the regulator said thedomestic market was facing a shortfall of 30 petajoules in 2023— equivalent to about 5 per cent of annual consumption.

The ACCC has called on Australia's gas majors — led by theliquefied natural gas producers operating from Queensland — to providemore of their uncontracted supplies for the local market.

"The east coast gas supply forecast for 2023 has improved,"ACCC chair Gina Cass-Gottlieb said.

"But the outlook remains uncertainas the LNG producers haven't yet committed sufficient volume under firmcontracts to address the risk of a domestic shortfall."

It comes amid attempts by the federal government to rein in energyprices and shield consumers by capping coal and gas markets.

A backdrop of intervention

According to the ACCC, the report analysed data from up to earlyDecember and therefore did not take account the government's intervention,which came into effect later that month.

It comes amid a backdrop oftension between the government and gas users on the one hand, and producers onthe other.

The ACCC's GinaCass-Gottlieb says 2023's gas supply outlook is uncertain.(ABC News: JohnGunn)

Many producers have reportedly been on a "gasstrike", angered by the way the government handled the intervention,and frustrated by what they considered a lack of detail over how the new ruleswould work.

The rules have temporarily capped wholesalegas prices for the next 12 months at $12 a gigajoule.

The government has also given the ACCC power to enforce so-calledreasonable pricing provisions on gas suppliers indefinitely.

The extraordinary steps were taken after domestic gas prices soared lastyear on the back of international market turmoil — initiated by Russia'sinvasion of Ukraine.

The ACCC noted in its report that LNG netback prices — a measure oflocal gas prices — ranged from $13 a gigajoule in mid-2021 to $39 agigajoule in mid-2022.

At one stage last March, it said prices peaked at $100 a gigajoule.

At the heart of the rises, the ACCC said, was the concentration ofmarket power in the hands of a few big gas exporters, which it said had"influence over nearly 90 per cent" of proven reserves.

Watchdog flags scrutiny

Ms Cass-Gottlieb said the wild gyrations in gas prices, which hadsubsided since the government intervened into the market, made the ACCC's rolemore important than ever.

"Our role monitoring and reporting on the market will beparticularly important this year as it will provide an information base forassessing compliance with the price order and reviewing itseffectiveness," she said.

A handful of majorproducers control most of Australia's eastern gas reserves.(Suppliedichitstocker, stock.adobe.com)

The Australian Petroleum Production and Exploration Association, whichrepresented gas producers, said the report showed there was enough supply tomeet demand.

Chief executive Samantha McCulloch noted the ACCC had also highlightedthe need for more investment in the gas industry to boost supplies.

"The industry has consistentlyhighlighted that the key to avoiding gas shortages is through policy settings,which are conducive to bringing on more investment in supply," she said.

"The report also shows demand for gas in southern states isexpected to exceed production by 52 petajoules from gas sources located insouthern states, reinforcing the need for Victoria and New South Wales todevelop their own resources, rather than rely on Queensland to do all the heavylifting. 

"We are now seeing the increased pressures from the impact of moratoriumsand bans in Victoria and New South Wales — the two biggest users of gas on the east coast."