Gas markets

The Department of the Environment and Energy works closely with high level bodies including:

  • Council of Australian Governments (COAG) Energy Council
  • Australian Energy Market Commission (AEMC)
  • Australian Energy Market Operator (AEMO)
  • Australian Energy Regulator (AER), who together oversee the national (east, north and west) gas markets.

The Gas Market Reform Group was established to look into gas market issues in more detail and a COAG Regulatory Impact Statement is underway to explore improvements to our pipeline regulatory framework. In addition, the ACCC and AEMO will continue reporting to the Energy Council on the state of the energy market as a whole.

What is being done to address changing gas prices?

A number of actions are being taken by the Australian Government to address this. In order to have an impact on prices, the Government is committed to the following:

Ensuring there is no domestic gas shortfall

The Australian Domestic Gas Security Mechanism commenced on 1 July, 2017. It is a temporary measure that aims to ensure that the domestic market doesn’t experience gas shortfalls due to gas export commitments. This mechanism means that, if necessary, the Government can restrict liquefied gas exports if they are deemed to leave the domestic market short of gas. The decision as to whether or not to restrict exports sits with the Commonwealth Minister for Resources and Northern Australia. The Minister will rely on assessments from AEMO, the ACCC, industry and other stakeholders in the decision-making process.

Improving the transparency, competitiveness and long-term security of Australia’s gas supply

To improve the transparency, competitiveness and long-term security of gas supply in Australia, the large COAG Energy Council Gas Market Reform Package announced in 2016 and augmented in 2017 is continuing and has progressed strongly.

The Government provided $2.5 million in the 2018-19 Budget to continue to improve operation of gas markets following the $90 million provided in the 2017-18 Budget.  

Moratoria and bans have a significant impact on gas exploration and production which affects supply and prices for commercial, industrial and residential consumers. The Government will continue to encourage states and territories with moratoria in place to lift these to develop more gas supply to bring into the market.

Highlights of the work being undertaken include:

  • New rules to level the negotiating playing field for gas transportation commenced on 1 August 2017. They require pipeline companies to provide more information to the market and establish binding arbitration to resolve contract negotiation disputes.
  • The delivery of a capacity trading and day ahead auction reforms which are scheduled to commence on 1 March 2019.
  • The ACCC is conducting a wide-ranging inquiry into the supply of and demand for wholesale gas in Australia, as well as to publish regular information on the supply and pricing of gas until 2020. As part of this work, the ACCC will scrutinise the pricing, volume and availability of domestic gas compared to gas that is being exported.

Gas Supply Guarantee

Gas powered generation of electricity has become increasingly important to electricity supply in the past decade and measures are in place to ensure we can meet our energy needs during peak demand periods, such as heatwaves. This has been achieved through co-operation and agreement between gas producers and power generation companies.

The gas pipeline industry also agreed to support the Peak Electricity Demand – Gas Supply Guarantee by committing to provide pipeline access to ensure the gas arrives at its destination on time and at a reasonable price.

More information