Santos' GLNG project at Curtis Island.
Santos' GLNG project at Curtis Island.

Pressure on Curtis Island LNG as AEMO warns of gas shortage

THE nation's peak energy body has warned Australia's east coast might not have enough gas in 2018, in the latest announcement to load up the pressure on Curtis Island's three LNG exporters.

The Australian Energy Market Operator warned the Federal Government yesterday the gas shortfall could be worst than expected, ahead of the Government's decision due next week on if it will trigger an export cap or ban on international exports from Curtis Island.

The AEMO forecast an "annual energy shortfall" in the domestic gas market of 54 petajoules in 2018 and 48 PJ in 2019, but said if gas demand increases the shortfall could double.

Further painting the grim picture for the three sites shipping gas overseas, the Australian Competition and Consumer Commission said the Government should pull the trigger on its new export policy.

"The expected shortfall could be reduced to a significant extent if the expected sales on international LNG spot markets were instead redirected to the domestic market," chairman Rod Sims said.

But Mr Sims also echoed those in the gas industry in his report when he said the export controls were only a short term solution.

"However, further steps are needed to address the underlying problems of lack of gas supply and lack of diversity of suppliers in the east coast market," he said. "Supply-side solutions are needed to bring more supply and suppliers into the domestic market, particularly in the southern states."

The export controls, which are part of the new Australian Domestic Gas Supply Mechanism, could see LNG exports from Curtis Island be diverted back into the domestic market.

Since announced in June the policy has copped criticism from the gas industry, warning it will drive away investment.

The Australian Petroleum Production and Exploration Association said the Gladstone's $70 billion LNG industry was wrongly being targeted for because of the forecast shortage.

"(The policy) is based on the flawed idea that the LNG industry is a risk to domestic supply when, in fact, the industry has underwritten, directly or indirectly, the new gas developed over the last decade," chief executive Malcolm Roberts said.

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