Gas supplies safe for 2019, watchdog says

Paul Osborne

The competition watchdog says there will be enough gas to supply households and business in 2019, but still has concerns about prices.

In September 2017, the Australia Competition and Consumer Commission raised fears about a possible shortfall in supply, which it warned could further lift prices and create problems for business and industry.

But in its latest report released on Thursday, the ACCC said lower consumption by gas-powered generators, higher production in Victoria and the expected start of flows from the Northern Territory will ease pressure on supplies in 2019.

As well, the federal government's October 2017 deal with LNG producers to limit exports in the case of a domestic shortfall has helped.

The ACCC said domestic price offers had "reduced substantially".

But commercial and industrial gas users were "still finding market conditions extremely challenging as gas prices remain at two to three times higher than historical levels".

"With production costs increasing and gas prices in the East Coast Gas Market being shaped by international LNG prices, domestic prices are unlikely to return to historical levels," the report said.

"International LNG prices are volatile and domestic prices might increase to reflect recent expectations of higher Asian LNG spot prices."

The market needed more supply and a greater diversity of suppliers, a better transport network and greater transparency.

Treasurer Scott Morrison said the report included some encouraging news on prices and supply, but "risks remain".

The risks included not being able to accurately forecast demand for gas by electricity generators and continuing restrictions in some states on some types of gas development.

"There's been some significant progress in the gas market, but it's still got some distance to travel," Mr Morrison told reporters in Melbourne.

Labor energy spokesman Mark Butler said the gas crisis was not over.

"When Malcolm Turnbull had the chance to take real action to tackle the gas crisis and impose export controls, he instead chose an unenforceable handshake agreement with the big gas exporters," Mr Butler said.

"The gas crisis isn't over, Australian manufacturers are paying the cost, and workers will pay the price."