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Australia's east faces gas shortfall in 2018, 2019; export curbs loom

[MELBOURNE] Eastern Australia faces a gas shortfall that could be as high as as 17 per cent of market demand in 2018, the nation's energy market operator said on Monday in a report that may prompt the government to curb gas exports.

The government is set to decide by Nov 1 whether to limit exports from any of the three liquefied natural gas (LNG) plants on Australia's east coast in 2018 under a new gas security law to shore up local supply for power plants and industry.

The decision will be based on reports from the Australian Energy Market Operator and the country's competition watchdog.

"Based on the most recent information from industry, together with AEMO's forecast demand, gas supply remains tight in eastern and south-eastern Australia in 2018 and 2019, and there remains a risk of a supply shortfall," Australian Energy Market Operator Chief Executive Audrey Zibelman said in a statement.

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The market operator said the projected shortfall risk in 2018 and 2019 is between 8 and 17 per cent of market demand.

For 2018 the shortfall risk is between 54 petajoules and 107 PJs. For 2019 it is between 48 PJ and 102 PJ, the market operator said.

The comments are in line with remarks by the chairman of the Australian Competition and Consumer Commission, Rod Sims, who warned last week that the gas market in 2018 was looking tighter than previously flagged.

Under the terms of the Australia Domestic Gas Security Mechanism, the LNG plant that has been seen most at risk of being forced to divert gas from exports to the domestic market is the Gladstone LNG plant, operated by Santos Ltd.

REUTERS

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