By Mike Foley and Nick Toscano
Homes and businesses in NSW and Victoria are facing winter gas shortages by 2028 – three years later than previously forecast – as the Albanese government prepares to fight the opposition over energy security ahead of the federal election.
In an update released on Thursday, the Australian Energy Market Operator (AEMO) renews its long-running warnings that consumers in the south-east are running dangerously short of natural gas amid the rapid depletion of the giant gas fields in Bass Strait that have supplied local buyers for decades.
Energy Minister Chris Bowen has blasted the former Coalition government’s “bin fire” gas policy as he fuels an election clash. Credit: Steven Siewert, Justin McManus
But AEMO’s latest update takes some of the urgency out of the impending crisis, as it pushes back its most immediate warnings of winter gas shortfalls from 2025 to 2028.
Meanwhile, the bigger risk of an annual deficit of east-coast domestic gas, originally forecast to hit by 2028, has now also been pushed back to 2029 by the AEMO.
The update delivers a critical boost to the Albanese government’s argument that its efforts to ensure adequate domestic gas supplies are working, just as it heads into the federal election in which the Coalition is seeking to make the future of the Australian gas industry a key battleground.
Climate and Energy Minister Chris Bowen slammed the Coalition’s record in government, which ended in 2022 with an AEMO forecast that east coast gas supply would drop 25 per cent between 2022 and 2026.
Wholesale gas prices also rose under the Coalition, spiking from a low point of about $4 a gigajoule to more than $30 by the time it left office.
“Three years on from the gas bin fire we inherited from the former Coalition government, there are signs our policy is paying off – with the domestic market outlook improving and now secure into 2029,” Bowen said.
The federal government will also unveil a new deal on Thursday with power and gas giant Origin Energy’s Queensland-based liquefied gas venture, Australia Pacific LNG, to direct an additional 40 petajoules over four years to the domestic market – enough to fully supply the heating and cooking needs of about 200,000 homes.
“Australia Pacific LNG continues to do the heavy lifting and remains committed to providing essential gas supply to Australia’s east coast into the future,” said Dan Clark, chief executive of Australia Pacific LNG, which Origin jointly owns with ConocoPhillips and Sinopec.
Peter Dutton’s opposition has elevated gas supply as a key campaign issue before this year’s election, promising to deliver a dramatic increase to the supply of natural gas if it forms government.
The role of energy in the cost-of-living crisis will be central in the upcoming election, due by May 17, and the Albanese government is under pressure following a draft ruling from energy regulators that household electricity bills are set to jump by as much as $200 a year in parts of the eastern states.
The opposition has pledged to halve the approval times for companies seeking to develop new gas projects in exchange for commitments from developers to set aside a portion of their production for local buyers only. It has also said it would extend the life of Woodside Energy’s huge North West Shelf gas operations in Western Australia by another 50 years.
“Report after report has confirmed that Australia is running out of gas and southern states will be hit hard,” Coalition energy spokesman Ted O’Brien said. “Yet Labor remains flat-footed and incapable of taking action to pour more gas into the system.”
AEMO’s latest update attributes the delay to south-eastern Australia’s gas shortfall threat to two key factors: the extension of the giant Eraring coal-fired power station in NSW, which will reduce the need for gas-fired electricity generation, and the ongoing move by consumers to switch from gas-powered stoves and heaters to electric alternatives, aided by government schemes.
Non-industrial gas use in Victoria has dropped 4.5 per cent compared to 2023 levels, AEMO said. The reduction was cheered by conservation groups advocating for a faster transition away from gas, a fossil fuel that burns more cleanly than coal but is still a major source of carbon dioxide and methane emissions that are dangerously heating the plant.
“The numbers are in – Victorian households are using less and less gas, even with a cold snap last winter, and together they have bought us all an extra year before shortfalls hit,” Environment Victoria climate and energy advisor Kat Lucas-Healey said. “This is proof positive that electrification is foundational to keeping the lights on.”
However, AEMO chief Daniel Westerman reiterated warnings that urgent investment to bolster gas supplies remained critical, including developing new gas fields, expanding pipeline capacity, increasing storage in the south, and turning to LNG imports.
State and federal energy ministers met last Friday to discuss “supply side actions”, which included developing laws to kickstart the introduction of specialised shipping terminals in Victoria or NSW to import shipments of super-chilled LNG from other parts of Australia or overseas.
While Australia is one of the world’s top shippers of LNG, there is limited pipeline capacity to transport gas thousands of kilometres from Queensland’s LNG fields to consumers in the populous south-eastern states, while gas produced at WA’s LNG operations cannot be transported east.
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