According to the Australian Competition and Consumer Commission’s (ACCC) Gas inquiry interim report released today, gas prices next year are expected to be cheaper than this year.
The report released today finds that there will be sufficient supply to meet forecast domestic and export demand in 2020. This is primarily due to east coast gas producers expecting to produce an additional 113 petajoule (PJ) of gas and the Australian Energy Market Operator predicting demand from gas powered electricity generators will be 16PJ lower.
The report also finds that offers made by producers in Queensland for supply in 2020 have generally been below $10/GJ. However, prices offered to commercial and industrial users in the NSW and Victoria have mostly remained in the $10-12/GJ range.
The report notes that prices paid by Australian commercial and industrial gas users are lower than those in other countries that purchase Australian LNG (such as South Korea and China). This reflects the transport costs involved when acquiring Australian gas.
The Government recently extended the ACCC gas inquiry to 2025. The ACCC will continue to monitor and report every six months on market conditions in the gas market. The ACCC’s ongoing role in monitoring gas market behaviour will also incorporate investigating some recent increases in profit margins for gas supplied to commercial and industrial users. The ACCC will report back to Government on whether this is a cyclical issue, or a reflection of longer term structural or competition issues.
The ACCC’s reporting builds on existing measures from the Government to secure Australia’s domestic gas. We were the first government to establish a gas export control framework - the ADGSM - in July 2017. We also commissioned the ACCC to hold an inquiry into wholesale gas and make regular public reports on its findings.
Both AEMO and the ACCC have found that those actions have already helped ensure supply and bring down prices in the domestic market, with gas prices dropping by around a quarter since they peaked in early 2017, and in some cases, contract offer prices have halved.
Further initiatives recently announced include bringing forward the scheduled review of the Australian Domestic Gas Security Mechanism (ADGSM) to this year, considering options to establish a prospective national gas reservation scheme and continuing reforms through the COAG Energy Council to improve transparency from gas producers and LNG exporters on prices, reserves and resources, and a comprehensive review of pipeline regulation.
The ACCC continues to advocate for an increase in supply and diversity of suppliers, particularly in the Southern States, and has made a range of recommendations to improve the transparency and operation of the East Coast Gas Market. This is why the Government continues to call on states and territories to remove blanket bans and moratoria on conventional and unconventional gas exploration and work with the Government to play their part in the long-term security of gas supply in Australia.