AEMO has called for more gas investment, as the majority of Australia’s supply continues to be exported.

Amid declining gas production from Bass Strait fields, the Australian Energy Market Operator (AEMO) says future gas shortages could hit southern states by 2028. 

This decline is happening faster than anticipated, which AEMO says could lead to “peak-day shortfalls” from 2025 during extreme winter conditions, alongside seasonal supply gaps from 2026.

AEMO's 2024 Gas Statement of Opportunities (PDF) report, incorporating insights from gas producers and infrastructure operators, aims to spur investment in the east coast gas system. 

“Gas production is forecast to fall faster than demand in the south,” says Daniel Westerman, AEMO's CEO.

In contrast, some analysts question the urgency, suggesting that the shift towards electrification and renewable energy might reduce gas demand more significantly than AEMO predicts. 

The report, however, points to the essential role of gas-powered electricity generation in transitioning to a low-emissions future, with gas, batteries, and pumped hydro supporting the reliability of the electricity network as coal-fired plants retire.

This looming challenge has spurred discussions around the need for LNG import terminals and other infrastructure projects to secure gas supplies for the future. 

In recent days, Resources Minister Madeleine King has met with Queensland’s three exporters of liquefied natural gas (LNG) - Shell’s QCLNG joint venture, Origin Energy-backed APLNG and Santos’ GLNG - to discuss a deal that could see more gas held back from export and reserved for local sales.

“I am confident of securing supplies for the coming year,” King said after meetings last week.
Even without a deal, the government could, for the first time, use the Australian Domestic Gas Security Mechanism (ADGSM) to redirect exports to fill local shortfalls, at the risk of upsetting international buyers.