Will unlocking new gas supply enable Australia to steer clear of forecast shortages and push energy transformation forward?

Australian Energy Producers, representing Australia’s upstream oil and gas exploration and production industry, has urged the country’s government to target new gas supply in the Federal Budget in a bid to avoid forecast shortages and ease cost-of-living pressures by putting downward pressure on prices and securing the economic and emissions reduction benefits of natural gas resources.

In its 2024-25 pre-budget submission, Australian Energy Producers has called for a plan, which will enable Australia to keep away from looming shortfalls while continuing to boost its efforts to deliver affordable and reliable energy for homes and businesses. With no release of new acreage for petroleum exploration since August 2022, the industry has emphasized the need for a new round to finally be awarded and the long overdue acreage releases, normally held annually, to resume.

The oil and gas industry claims that the Australian government can ensure reliable, affordable energy by working with industry on an action plan to urgently bring new gas supply to address near-term structural gas shortfalls in Eastern and Western Australia; developing a future gas strategy that recognizes the critical, long-term role of gas in achieving net zero by 2050; supporting exploration for natural gas and carbon capture, utilization and storage (CCUS) through acreage releases; and determining energy needs for future industries, including critical minerals processing.

Samantha McCulloch, Australian Energy Producers’ Chief Executive, underscored: “After more than a year of policy instability, government interventions and project approval delays, a recalibration of the policy and investment environment for natural gas is needed to secure our energy future. New gas supply is urgently needed from coast to coast to ensure reliable and affordable energy for homes and businesses.

“We are calling on the federal government to work with gas producers, energy users, and state governments on an action plan to bring on new supply to address near-term structural shortfalls. Whether it’s through streamlining environmental approvals or fixing the broken offshore regulatory system, Australia needs to move quickly to secure the economic, energy security and emissions reduction benefits of natural gas. “

Furthermore, Australian Energy Producers is adamant that price controls imposed on the east coast gas market in 2023 should not become a permanent fixture. As a result, it has advised the government to outline a plan to return to market signals and incentivize new supply ahead of the scheduled 2025 review of the code of conduct. In addition, the government has also been urged to review the energy needs for critical minerals processing to ensure the gas supply to power the manufacturing of the minerals required to get to net zero.

In light of this, the Australian government has been asked to restore investor confidence in the new gas supply by fixing the regulatory uncertainty and delays for offshore gas projects; streamlining environmental approvals in the Environment Protection and Biodiversity Conservation (EPBC) Act reforms; implementing taxation and fiscal policy settings that support investment in new gas supply; and removing pricing controls and return to market signals for the east coast gas market to secure investment in new supply.

Moreover, the pre-budget submission points out the important long-term role natural gas will play in Australia’s energy transition to net zero, as well as the growing opportunities for LNG exports to support regional emissions reductions. The submission also calls for Australia to be a regional carbon capture, utilization, and storage hub, covering the development of a national roadmap and creating net zero zones to fast-track emission reductions.

Australian Energy Producers believes that the country’s net zero transformation can be delivered by developing a CCUS roadmap to support the scale-up of CCUS technologies; ensuring the national hydrogen strategy recognizes and incentivizes hydrogen from natural gas with CCUS as part of Australia’s future low-carbon hydrogen mix; supporting the creation of net zero zones to reduce the costs and fast-track emissions reductions in hard-to-abate industries; and developing emissions policies that recognize the need for new gas supply to achieve net zero by 2050.

McCulloch added: “The release of new offshore petroleum exploration acreage is long overdue and this annual process needs to get back on track to maintain our domestic and regional commitments. We have proposed the establishment of an Australian LNG Producer-Consumer Taskforce to strengthen regional relationships and ensure Australia benefits from a potential ten-fold growth in Asian LNG demand.

“Carbon capture is part of the net zero pathway in a multitude of ways – such as lowering emissions from industries, unlocking low carbon hydrogen and supporting carbon removal. It can also be a major economic driver for Australia through new jobs and investment.”

Australian Energy Producers underlines that Australia’s commitment to remaining a reliable energy partner in the region can be delivered by seizing the LNG demand growth opportunity in the region; establishing an Australian LNG Producer-Consumer Taskforce; advancing Australia as a regional CCUS destination; and recognizing the role its LNG can play in the trading partners’ decarbonization plans.