Skip to main content
Open this photo in gallery:

Prelude floating LNG plant is live and operating its FLNG facility off northwest Australia in this undated handout photo obtained June 11, 2019.HANDOUT/Reuters

Australia’s competition watchdog for the first time has urged the government to curb liquefied natural gas (LNG) exports, warning the east coast of one of the world’s biggest suppliers of the fuel could face a shortfall and soaring prices next year.

Monday’s recommendation from the Australian Competition and Consumer Commission (ACCC) comes as the country faces a local supply crunch even as it vies with Qatar and the United States as the world’s top LNG exporter.

If implemented, the recommendation could affect fuel supplies and prices for a host of global consumers already roiled by the impact on the gas market of war in Ukraine.

Gas output is declining at Australia’s offshore fields in the southeast that have long supplied the populous east coast, and pipeline capacity is limited to move gas south from where the LNG exporters are.

The call for action came in a recommendation that the government pull the trigger on the Australian Domestic Gas Supply Mechanism, a measure set up in 2017 that can be used to force the east coast’s three liquefied natural gas (LNG) exporters to divert gas to the domestic market to avert shortfalls.

This would impact LNG joint ventures led by Shell Plc , Origin Energy and Santos Ltd. Their partners include PetroChina, ConocoPhillips, Sinopec, Korea Gas Corp (KOGAS), TotalEnergies SA, and Malaysia’s Petronas.

“Our latest gas report finds that the outlook for the east coast gas market has significantly worsened,” ACCC Chair Gina Cass-Gottlieb said in a statement.

The commission found that LNG exporters are likely to withdraw more gas from the domestic market than they plan to supply, with a shortage of 56 petajoules now expected, equivalent to around 10% of demand.

Not only did the commission warn of a shortfall in 2023 but also said it was “strongly encouraging LNG exporters to immediately increase their supply into the market”.


The global supply crunch has worsened in the wake of the Russia-Ukraine conflict, as LNG buyers in Europe and Asia compete for shipments to replace Russian gas, boosting prices and spurring Australia’s exporters to send uncontracted gas offshore.

The ACCC report comes after gas demand surged for power generation due to coal-fired plant outages and for winter heating, which sparked a steep rise in prices for both gas and power and nearly led to blackouts in June.

The findings add fresh pressure on the newly elected Labor government to beef up local gas supply, with soaring prices having led gas-dependent manufacturers to threaten to shut plants and cut jobs, as some smaller manufacturers have already done.

Treasurer Jim Chalmers described the findings on Monday as “deeply concerning”, and said the report highlights “some alarming features” about the gas market on the east coast, home to nearly 90% of Australia’s population.

“It’s critical that our domestic gas supply is secure and competitively priced, particularly when households and businesses are under extreme pressure,” Chalmers said.


Looking to stave off new regulations, such as a gas reservation policy, the gas industry’s lobby group responded to the ACCC’s call by highlighting that LNG exporters have 167 PJ of uncontracted gas available for the domestic market, as noted in the watchdog’s report.

“This is more than enough gas to ensure that no shortfall occurs,” the Australian Petroleum Production and Exploration Association’s acting chief executive Damian Dwyer said in a statement.

The Australian government announced on Monday it would extend the Australian Domestic Gas Security Mechanism until 2030, retaining the trigger to prevent supply crunches.

Up to now, Resources Minister Madeleine King has said she does not want to interfere with long-term export contracts.

On Monday, she addressed the ACCC recommendation, telling reporters in Canberra on a televised media conference, “The gas producers know this is damning for them.”

Analysts said King will face pressure from others in her party to protect manufacturing jobs.

“Manufacturing jobs and cost of living are likely to remain a higher-priority political issue,” Credit Suisse analyst Saul Kavonic said.

“That said, we doubt the government wants to intervene too strongly unless it has to. A ‘voluntary’ solution that avoids any manufacturing closures or power outages would be preferred,” he said.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an editorial error

Report a technical issue

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 19/04/24 7:00pm EDT.

SymbolName% changeLast

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe