East coast gas market
An interconnected gas grid connects Australia’s eastern, northern and southern states and territories. This market has undergone structural change as the Queensland gas export industry has developed. These changes have resulted in changes to the direction of pipeline flows, the domestic supply/demand balance and gas contract prices. The Australian Government is undertaking a range of reforms to improve the functioning of the market and implementing measures to deliver affordable and reliable gas.
National Gas Infrastructure Plan: Interim Report
On 7 May 2021, the Government released the National Gas Infrastructure Plan: Interim Report, which identifies the priority infrastructure developments required to alleviate forecast southern gas supply shortfalls in the near-term.
The Government has committed $58.6 million in funding in the 2021-22 Budget to continue to advance the work of the gas-fired recovery. These measures will enable our gas market to continue to accelerate Australia’s economic recovery and guarantee our competitive advantage in key industries.
These measures include:
- The release of the National Gas Infrastructure Plan: Interim Report
- $38.7 million of early works support for critical gas infrastructure projects
- $3.5 million for the development of a long-term Future Gas Infrastructure Investment Framework
- $4.6 million to develop initiatives that empower gas reliant businesses to negotiate competitive outcomes, which includes developing a voluntary standardised contract framework with industry
- $6.2 million to design, consult and implement reforms to continue accelerating the development of Wallumbilla as Australia’s Gas Supply Hub
- $5.6 million to develop a further National Gas Infrastructure Plan for 2022.
Information on plans for further stakeholder consultation for these reforms will be made available in due course.
Australia’s Gas-Fired Recovery Plan
On 15 September 2020, the Government announced $52.9 million in funding to implement the Gas‑Fired Recovery Plan which is designed to ensure the Australian gas market is working to benefit all Australians.
The Government’s Gas-Fired Recovery agenda will support energy reliability, security and affordability to stimulate Australia’s economic recovery, enable industry growth and support Australian jobs.
The Gas-Fired Recovery Plan will focus on three key action areas: unlocking gas supply, ensuring efficient transportation, and empowering consumers.
See the Prime Minister’s media release for more information.
Ensuring there is no domestic gas shortfall
The Australian Domestic Gas Security Mechanism (ADGSM) commenced on 1 July 2017 and is in place until 1 January 2023. It aims to ensure there is a sufficient supply of natural gas to meet the forecast needs of energy users within Australia. This mechanism means that, if there is a supply shortfall in the domestic market, liquefied natural gas (LNG) projects may be required to limit their exports or find new gas sources. The decision as to whether or not to restrict exports sits with the Commonwealth Minister for Resources, Water and Northern Australia. The Minister’s decisions are informed by expert advice from the Australian Energy Market Operator (AEMO), the Australian Competition and Consumer Commission (ACCC), and industry. New ADGSM Guidelines came into force on 6 January 2021.
Improving the transparency, competitiveness and long-term security of Australia’s gas supply
The Government is working through the Energy National Cabinet Reform Committee (ENCRC) to consider new measures that will require greater transparency across the gas market, from gas producers and LNG exporters on prices, reserves and resources, to ensure that the gas market operates in an increasingly accountable and transparent way.
Ensuring our gas pipelines operate effectively is essential for the secure delivery of domestic gas supplies at affordable prices. This is why the Government is also progressing a comprehensive review of pipeline regulation through ENCRC. This will identify and evaluate options to deliver an effective and well-integrated gas pipeline regulatory framework.
In addition, a number of reforms have commenced and these are expected to support greater transparency and market liquidity:
- 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.
- Pipeline capacity trading and day ahead auction reforms commenced on 1 March 2019.
- On 3 May 2021, Energy Ministers agreed a package of new gas pipeline regulation reforms to improve price transparency and make it easier to do business.
Australian Competition and Consumer Commission Gas Inquiry
Ensuring our electricity and gas markets operate competitively, transparently and in the long-term interests of consumers is a core Australian Government priority. Improved scrutiny and accountability is placing downward pressure on prices and improving market operations.
The ACCC is conducting a wide-ranging inquiry into the supply of and demand for natural gas in Australia.
Matters being monitored and considered by the inquiry include:
- the pricing and availability of offers to supply gas
- the volumes of gas supplied or available for current or future supply, including natural gas extracted or produced in Australia, or imported into Australia
- the pricing, volume and availability of gas for domestic supply compared to the pricing, volume and availability of gas for export
- the pricing, volume and availability of other goods or services, such as goods or services for drilling, storing or processing gas, that enable, assist or facilitate the supply of gas or gas transportation services in Australia
The ACCC has extended its inquiry to December 2025, to continue to publish regular information on the supply and pricing of gas. Extending the inquiry ensures continued transparency of the gas market and identify opportunities for market reform, including in the retail sector.
See the ACCC website for more information.
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.