LNG giants escape export clampdown as supplies lift

East coast gas producers will avoid facing unprecedented orders to break export contracts and redirect supplies to Australian buyers this winter after the consumer watchdog determined there will be enough gas available to meet domestic demand.

The federal government last year moved from a yearly to a quarterly review of whether it needs to cap liquefied natural gas (LNG) exports from Queensland’s three shippers of the fuel – Shell’s QCLNG joint venture, Origin Energy-backed APLNG and Santos’ GLNG – to avert energy shortfalls for millions of gas-connected homes and businesses.

While LNG has boomed to become one of Australia’s biggest exports, concerns have been building about dwindling domestic gas supplies amid rapid output declines from offshore fields in the Bass Strait, which have traditionally supplied as much as two-thirds of gas for the local market on the eastern seaboard.

However, Resources Minister Madeleine King on Thursday said the government would not need to trigger export restrictions under the so-called Australian Domestic Gas Security Mechanism (ADGSM) for the three months to September 30.

“The government is confident that the ADGSM doesn’t need to be activated for the third quarter of 2024 because Australia’s gas market will likely have enough supply,” she said.

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The decision follows an update from the Australian Competition and Consumer Commission on Thursday, calculating that the east coast market will have a gas surplus of 6 petajoules during the period, even if the LNG ventures exported all their uncontracted gas.

Although southern states of Victoria, NSW, ACT, South Australia and Tasmania will need an additional 25 petajoules to avoid a winter shortfall, there is forecast to be enough gas and pipeline capacity to bring supplies from Queensland and the Northern Territory to fill the gap.

King said the report demonstrated that initiatives, such as the government’s changes to the Australian Domestic Gas Security Mechanism and new terms of its agreement with the LNG ventures, were having a positive impact in bolstering gas supplies for homes and businesses.