Australia may have to divert LNG exports to cope with possible gas shortage

From 2026, Australia must require additional commitments to expand its gas supply.

Exporters of liquefied natural gas (LNG) from Australia's east coast may have to divert excess gas supplies to domestic customers in order to avoid any potential shortages this winter in the country's south, the energy market operator said Thursday.

Despite increased industry production commitments since last year, supply in South Australia is declining rapidly, with growing short-term shortage risks and long-term supply shortfalls, the Australian Energy Market Operator (AEMO) said.

"To minimize shortage risks, committed infrastructure and supply projects need to be completed on time. (...) Additional gas storage and the development of gas pipelines and LNG import terminals could play an important role," CEO Daniel Westerman said in a statement accompanying AEMO's outlook.

"The risk of gas shortages each year from winter 2023 to 2026 in all southern jurisdictions remains in extreme weather conditions, (...) with the risks further exacerbated if gas storage levels are insufficient," Westerman said.

From 2026, Australia should require additional commitments to expand its gas supply or have sufficient renewable projects to offset gas demand, AEMO said.