Gas rig

Australia's competition watchdog has warned that the east coast will face gas shortages by 2027, a year earlier than the forecast timeframe, with some states falling short by 2026, aided by a delay in approving new projects.

The Australian Competition and Consumer Commission (ACCC) released an interim report that urged for immediate action to increase production and supply to meet the rising demand.

Two weeks ago, Australia's energy market operator stated that the east was facing a gas shortage, as the demand for heating rose due to a prolonged cold snap. And, the main gas plant in the region was affected by an extended outage, Reuters reported.

In its bid to reduce dependence on coal-fired energy supply, Australia has been promoting gas as the ideal choice to transition to cleaner energy.

Australian Energy Producers Chief Executive Samantha McCulloch urged the governments to heed ACCC warning and take immediate action to fast-track gas projects.

"Without immediate government action to address the looming gas supply crisis, millions of Australians face higher energy prices and the real risk of blackouts," McCulloch said.

According to the interim 2017-2030 report, as the New South Wales government and Origin Energy extend operations of the Eraring coal-fired power station by two more years, it could mitigate gas demand to a certain extent, The Guardian reported.

"The southern states -- NSW, South Australia, Tasmania and Victoria -- are expected to face shortages of locally produced gas from 2026," the commission said.

Currently, these states depend on gas supply from Queensland during peak winter, driven by a heating demand. Their reliance on the Queensland supply will increase if the states fall short in local production.

Though Australia produces surplus gas, a bulk of the supply is contracted for export. ACCC reported that in 2025, liquefied natural gas producers are expected to export 1369 petajoules, or about 71% of output.

However, the gas price has been on the decline since it peaked in mid-2022. The price drop has been attributed to the stabilizing of international prices and a 12-month temporary price cap between 2022 and 2023.

While Treasurer Jim Chalmers commended the gas market code on prices, ACCC cautioned it was too early to draw a conclusion.