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Meeting east Australia’s gas supply challenge

By João Segorbe and Peter Lambert

Meeting east Australia’s projected gas demand requires choices to be made—and these will influence how the market will look in 2030.

Demand for gas from east Australia is projected to remain flat from today to 2030 at a level of up to 2,155 PJ, of which 68 percent will be for LNG exports and 32 percent for domestic consumption. As current supply sources follow their normal declining course, new supply is needed to compensate. Over A$40 billion of planned supply investments over the next 15 years may not be enough. More developments are needed to meet east Australia’s full demand potential—these needs add up to an estimated 465 PJ (21 percent of 2030 total gas demand forecast) required by 2030.

There are sufficient undeveloped resources and efficiency opportunities to meet east Australia’s full demand potential. This gives a range of options, with each set of options leading to a different market dynamic and likely different price levels. Depending on the chosen path, expected price dynamics could range from a low case of local marginal cost of A$7–8 per GJ to a high case of parity with global markets. The latter could see prices reaching up to A$12 per GJ, and it could also expose the local market to international price volatility. It is worth noting that even local marginal cost pricing would likely see prices increase versus today’s levels of A$5—6 per GJ.

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