Australia’s Energy Transition in Jeopardy Amid Natural Gas Supply Shortages

Australia’s transition to net zero is being threatened by the limited availability of local natural gas supply, one of the country’s biggest energy infrastructure operators.

“Without gas, we’re going to see major disruptions to energy security and costs will increase. Without gas, we’ll be keeping the coal and diesel generators going for a long, long time,” the chief executive of APA Group said at an industry conference this week in a stark warning that Australia had a “desperate need” for new gas supply.

Adam Watson went on to point out that several provinces are extending the lives of their coal power plants instead of switching to gas because there is not enough gas—betraying the purpose of the energy transition.

He also criticized the idea of building import terminals for liquefied natural gas in Australia, when there is an abundance of local gas supply. It is this gas supply that has made Australia one of the world’s largest LNG exporters.

Ironically, it was this focus on gas exports that led to shortages of gas on the domestic market, forcing the previous government to pass emergency legislation a few years ago obliging gas companies to allocate a certain portion of their output for the domestic market before they exported the rest.

APA’s Watson was not the only one to sound the alarm on future gas supply sufficiency and its implications. Exxon’s Australia commercial director warned that natural gas supply for the southern states of the country could slump by as much as 44% by 2030 without fresh investment and political support.

"Chasing sizably lower domestic gas prices requires significantly shorter regulatory timelines because one third of the gas that will be required by consumers on the east coast between 2025 and 2030 is not in production," David Berman said at the same industry event, as quoted by Reuters.

By Irina Slav for Oilprice.com

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