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, through the Energy Ministers’ Meeting, is undertaking a range of reforms aimed at supporting a more secure, resilient and flexible east coast gas market.
Gas Market Code
The Australian Government has implemented the Gas Market Code under the Competition and Consumer Act 2010. The Gas Market Code will ensure that east coast gas users can contract for gas at reasonable prices and on reasonable terms. The Code is a key element of the government’s Energy Price Relief Plan, announced in December 2022.
The Code has:
- established a clear price anchor for commercial negotiations
- incentivised producers to commit more gas to the domestic market
- set minimum standards for dealings between east coast gas producers and their customers.
The Code commenced on 11 July 2023 with a 2-month transitional period. This allowed companies to adapt to new conduct provisions, record keeping and reporting obligations. The transitional period ended on 11 September 2023.
Securing Australian domestic gas supply
The Australian Domestic Gas Security Mechanism (ADGSM) commenced on 1 July 2017 and is in place until 2030. 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. 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. Following a review, the mechanism was reformed, commencing on 1 April 2023.
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:
- pricing and availability of offers to supply gas
- volumes of gas supplied or available for current or future supply, including natural gas extracted or produced in Australia, or imported into Australia
- pricing, volume and availability of gas for domestic supply compared to the pricing, volume and availability of gas for export
- 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 2030, 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.
For more information see the ACCC website.
Planning for gas to 2050
The Australian Government is developing a Future Gas Strategy to help us plan for the future and support Australia, and our region’s, transition to net zero.
The strategy’s key objectives are to:
- support decarbonisation of the Australian economy
- promote Australia's energy security and affordability
- enhance Australia’s reputation as an attractive trade and investment destination
- help our trade partners on their own paths to net zero.
The Future Gas Strategy development process is being led by the Department of Industry, Science and Resources.
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