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Australia's east faces immediate gas shortage amid cold snap, outage

21st June 2024

By: Reuters

  

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SYDNEY - Australia's east is facing a gas shortage after a cold snap drove up demand for heating and power while supply dipped due to an extended outage at the region's main gas plant, the energy market operator said.

To help boost supply, the market operator has asked gas producers in Queensland state, which include Shell, Origin Energy and Santos, to send gas to the southern states.

The Australian Energy Market Operator (AEMO), in a notice issued late on Wednesday, warned of heightened risks of gas supply shortfalls during Australia's winter months.

"The supply of gas in all or part of the east coast gas system may be inadequate to meet demand," the notice said.

Gas demand has surged for power generation at the same time as heating as the weather conditions have hampered wind and solar power output, the market operator said.

And demand jumped just as the main gas plant that supplies the southeastern states, Longford, jointly owned by Exxon Mobil's Esso and Woodside Energy, had to cut production more than forecast for extended maintenance work, AEMO said.

Esso Australia said it expected to return to full production by July 1.

Australia considers gas a critical element in its transition to cleaner energy as the country moves rapidly away from its dependence on coal-fired power stations, and has been reaching new gas deals to plug the gaps in long-term supply.

But the market operator has been warning about potential gas shortages, calling for urgent new investment to prevent any shortfall.

East coast gas production was running at full capacity according to a statement from Australian Energy Producers, which represents firms such as Exxon and Santos. The AEMO warning underscored the need for new investment in gas supply, it added.

Prime Minister Anthony Albanese said Energy Minister Chris Bowen would work with the AEMO and the energy industry to manage gas supply. The market operator held talks with the gas industry on Thursday, an AEMO spokesperson said.

"We will work those issues through with AEMO ... this is not the first time that has been declared," Albanese told ABC television, but said the country does need more gas in the east.

Australia produces far more gas than it needs to meet its domestic demands, but most supply is contracted for export.

Edited by Reuters

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