• About
  • Advertise
  • Subscribe
  • Contact
  • Events
Sunday, June 15, 2025
Newsletter
SUBSCRIBE
  • News
    • Contracts awarded
    • Open tenders and opportunities
    • Events
  • Features
  • Water
  • Wastewater
  • Gas
  • Electricity
  • Civil Construction
  • Events
No Results
View All Results
  • News
    • Contracts awarded
    • Open tenders and opportunities
    • Events
  • Features
  • Water
  • Wastewater
  • Gas
  • Electricity
  • Civil Construction
  • Events
No Results
View All Results
Home

AEMO releases gas forecast

by Lauren Cella
December 9, 2016
in Gas, News, Policy
Reading Time: 6 mins read
A A
Share on FacebookShare on Twitter

The Australian Energy Market Operator (AEMO) has released its third annual gas forecast, which raises some challenges and uncertainties around gas demand in eastern and south-eastern Australia during the next 20 years.

AEMO’s 2016 National Gas Forecasting Report (NGFR) provides insights into the increasingly complex interdependencies between the gas and electricity sectors and the relationship between Australia’s energy demand and growing links to the international gas sector.

The gas forecasts continue to be dominated by gas demand to supply liquefied natural gas (LNG) exports, with Australia (including east and west coast LNG) projected to become the world’s second largest LNG exporter by 2018, and the major LNG supplier for East Asian markets.

AEMO Chief Operating Officer, Mike Cleary, cautioned that these projections identify a range of major uncertainties facing the industry.

“With this outlook comes great challenges for policy-makers, infrastructure planners, and asset operators.

“As we continue to highlight in each of our forecasting and planning reports, the energy industry, the economy, and the consumer is transforming rapidly, requiring a re-thinking of the energy system and new solutions to manage the transition to new energy sources and technology.

“The domestic gas sector in eastern and south-eastern Australia is now linked to a more volatile world market for gas through our LNG export industry, and small supply chain disruptions can have large domestic impacts,” Mr Cleary said.

Mr Cleary said that gas-powered generation (GPG) is expected to play an important role in the transition to a low-carbon future.

“It is anticipated that gas will play a key role in the transition to a low-emission future, however the size of this role will depend on the pathway that the Australian energy industry takes.

“GPG’s role will be important in balancing the gap between retirement of coal powered generation and the implementation of new intermittent renewable energy sources in the absence of alternatives such as large-scale storage and demand management.”

Mr Cleary said that in the short term projected GPG growth was forecast to stretch available domestic conventional gas supply, with the greatest gas supply challenge forecasted to occur between 2018 and 2024.

“In this scenario, as new gas is sourced from higher-cost fields, combined with the effect of less domestic supply relative to demand, gas commodity prices are expected to rise.

“While the projected impact on the retail price paid by households and businesses will not reflect this high increase, modelling indicates the price impact to consumers could contribute to a reduction in domestic gas use,” Mr Cleary said.

Mr Cleary emphasised the importance of a coordinated approach to forecasting the complex dynamics shaping Australia’s energy future.

“With the projections for gas consumption showing a number of potential investments having an increased risk of being stranded if weaker economic assumptions were to occur, now more than ever planning solutions will need to prioritise flexibility, innovation and options to defer investment until some uncertainty is resolved.

“A coordinated forecasting approach is imperative given the range of possible pathways to Australia’s energy future,” said Mr Cleary.

“Through our energy forecasting and planning reports, AEMO is focused on providing industry with an independent, strategic and holistic view of the interdependencies driving Australia’s energy future.

“Our reports map out the increasingly complex dynamics between gas, electricity, and emissions policy objectives.”

AEMO continues to liaise with gas industry participants and monitor key uncertainties facing the sector, and will provide updates if there are material changes to market conditions.

Australian Petroleum Production and Exploration Association (APPEA) Chief Executive, Dr Malcolm Roberts, said AEMO’s 2016 NGFR was a timely warning for governments.

“AEMO has correctly described the east coast gas market as at a ‘crossroads’,” Dr Roberts said.

“To ensure we take the correct path, governments in eastern Australia must pull out all stops to encourage the investment needed to urgently address the gas supply challenges that are forecast to occur between 2018 and 2024.

Dr Roberts said with COAG Energy Council meeting next week, there had never been a more urgent need for positive action than there was right now.

“The NGFR forecasts total gas consumption will rise, driven by LNG exports and growth in gas-fired power generation (GPG).

“This highlights the vital role natural gas will play in providing cleaner energy to Asia and the growing role natural gas could play domestically in partnering with renewables as we move towards a cleaner energy future.”

Dr Roberts said the information released by AEMO was another sobering reminder that the East Coast needed rapid development of new gas reserves to guarantee supply and the transition to a low carbon future was at risk.

“APPEA has long argued that if we wish to achieve a more competitive market, put downward pressure on prices and ensure stable, adequate supply, we must bring more gas to market.

“Unfortunately, a mix of policy indecision, restrictive regulations and politically motivated bans and moratoriums, particularly in Victoria, has stymied exploration and development.”

Dr Roberts said the NGFR, in discussing the range of uncertainties and challenges facing the market, had also highlighted the large difference in gas supply arising from a ‘weak’ scenario and a ‘strong’ scenario.

“This brings into sharp focus the key role of policymakers in establishing sensible policy frameworks to allow the industry to reach its potential and play its part as we move towards a lower emissions future,” Dr Roberts said.

“In Victoria, almost 80 per cent of households and thousands of local businesses rely on natural gas, yet the state refuses to develop its onshore resources.

“Sound policies are also needed to provide greater certainty and investor confidence to support exploration and reduce the high cost of development and production.”

The Australian Pipelines and Gas Association (APGA) also called on governments to act immediately in developing a comprehensive and technology-neutral national energy policy to remove the supply uncertainties highlighted in the 2016 NGFR.

APGA Chief Executive, Cheryl Cartwright, said while the AEMO report predicted a shift to lower-emissions gas-fired power generation, that transition hinged on the question of sufficient supply.

“It is very concerning that AEMO is flagging that gas supply may be sufficiently constrained that it
will be more economic to refurbish older coal power stations rather than build new gas power
stations,” Ms Cartwright said.

“The solution to the gas demand-supply imbalance is getting more gas into the system.

“Removing the moratoria on the extraction of gas that applies in states such as Victoria would assist in increasing gas supply, but this is not the complete solution and further development is needed.

“Without a clear energy policy, generators will have no guidance on investment decisions, and that threatens the security of our energy system, so the transition to a low-emissions future is likely to result in higher costs for energy users.”

Ms Cartwright said the difference between the strong and weak gas demand scenarios in the AEMO report was also concerning.

“At 1600 petajoules, this is not just the gas market we’re talking about,” Ms Cartwright said.

“These scenarios are the difference between a strong and weak manufacturing sector, a strong and weak reduction in emissions from the electricity sector, and a strong and weak Australian economy.”

Ms Cartwright said governments had to take action and ensure Australia had the natural gas it needed to drive economic development.

“With the CoAG Energy Council meeting next week it is vital Ministers focus on identifying
meaningful action that will result in more gas supplied to the Australian market.

“Australia has abundant gas reserves – sufficient to supply the export and domestic gas markets.

“We need a sensible energy policy that will see Australia reduce carbon emissions efficiently and
economically and we need the moratoria on unconventional gas extraction to be lifted.

“The supply challenges are not decades away, they will be starting next year.”

Related Posts

Research suggests the lack of charging infrastructure means that almost half of Australian EV drivers are considering switching back to engine vehicles. Image: Brastock/adobe.com

Powering the EV transition

by Katie Livingston
June 12, 2025

Insufficient public charging infrastructure is hindering Australia’s uptake of electric vehicles, but an answer lies with the humble powerpole. The...

Image: miss irine/stock.adobe.com 

ECA report calls for national CER body

by Katie Livingston
June 12, 2025

According to the latest report from Energy Consumers Australia (ECA), a dedicated and enduring national body is needed to oversee...

Image: Genus 

NBN Co awards $130M contract for fibre upgrade works

by Katie Livingston
June 12, 2025

GenusPlus Group will support NBN Co as it upgrades the remaining nbn Fibre to the Node (FFTN) network, under a...

Read our magazine

Join our newsletter

View our privacy policy, collection notice and terms and conditions to understand how we use your personal information.
Utility is the title of choice for decision makers at all levels of water and energy utilities, as well as other major players like consulting engineers and first-tier contractors. Utility is integrated across print and online, and explores the biggest news and issues across the utility industry. It is Australia’s only dedicated utility magazine, and covers all areas of the utility sector, including water and sewer, gas, electricity, communications and the NBN.

Subscribe to our newsletter

View our privacy policy, collection notice and terms and conditions to understand how we use your personal information.

About Utility

  • About
  • Advertise
  • Subscribe
  • Contact
  • Digital magazine
  • Events
  • Terms & Conditions
  • Privacy Collection Notice
  • Privacy Policy

Popular Topics

  • News
  • Water
  • Electricity
  • Projects
  • Water and Wastewater Treatment
  • Spotlight
  • Civil Construction
  • Renewable Energy

© 2025 All Rights Reserved. All content published on this site is the property of Prime Creative Media. Unauthorised reproduction is prohibited

No Results
View All Results
NEWSLETTER
SUBSCRIBE
  • News
    • Contracts awarded
    • Open tenders and opportunities
    • Events
  • Features
  • Water
  • Wastewater
  • Gas
  • Electricity
  • Civil Construction
  • Events
  • About
  • Advertise
  • Subscribe
  • Contact

© 2025 All Rights Reserved. All content published on this site is the property of Prime Creative Media. Unauthorised reproduction is prohibited