Australia Gas Market Interventions Fail, Regulator Finds
The Australian Competition and Consumer Commission said that the government's recent efforts to increase gas supplies and lower prices in Australia have largely been unsuccessful and could even be increasing the risk of shortage, according to the regulator.
In a recent report, the Australian Competition and Consumer Commission (ACCC), said that several market interventions undertaken in response to a global energy crisis in 2022 had "not led to a material improvement of market outcomes".
These measures included changes to Australia's Domestic Gas Security Mechanism, and a Heads of Agreement between the three East Coast liquefied gas exporters that required them to offer uncontracted volumes of gas first to the domestic market.
The government has also implemented a code for the gas industry and a cap of A$12 per gigajoule ($7.91), which applies to all producers along the east coast.
The ACCC stated that while some additional gas was supplied to the domestic market, there had not been "material improvements in long-term security, reliability or affordability" up until now.
The ACCC stated that the pacts with QCLNG (run by Shell), APLNG (run by Origin Energy) and GLNG (run by Santos) are voluntary, and only commit producers to making offers, rather than supplying the domestic market.
The report found that the changes in the 2023 gas supply mechanism had led to "inefficiencies", by reducing the incentives for LNG producers, to produce gas without contract and make a net contribution on the domestic market.
It said that "These incentives changed appear to have had an unintended result of increasing the risk of a domestic supply shortage."
The ACCC warned that there is a risk of gas shortages in Australia's Southern States in the second and third quarters of 2026.
Australia exports more than it consumes but its main reserves are in the north-west, far away from the southeast, where the majority of people live and the demand is greatest. Reporting by Christine Chen, Sydney. Editing by Lincoln Feast.
(source: Reuters)
