'Wake-up call': watchdog reignites gas supply warning

Gas shortfalls in eastern states are expected a year earlier than the competition watchdog predicted a few months ago, with new supplies needed to avoid coming up short.

The Australian Competition and Consumer Commission's gas report released on Friday said gas needs would be met for the next three years but the expected timeline for shortages was brought forward to 2027.

"This is earlier than our last forecast  - in December 2023 - of a possible shortfall from 2028, reflecting lower forecast supply due to delays in anticipated regulatory approvals for new projects and problems with legacy gas fields," the report said.

The ACCC and the Australian Energy Market Operator have long forecasted a gap in gas supply for southern states and called for new investment to keep up with demand from homes, businesses and gas-powered electricity generation.

National gas supplies.
Australia needs to find new gas reserves to ensure ongoing supply, a report warns. (Darren England/AAP PHOTOS)

Australian Energy Producers chief executive Samantha McCulloch said governments could not continue to ignore the warnings.

"The Australian Energy Market Operator warned that Victoria almost ran out of gas a fortnight ago because of strong demand for gas-fired power generation during a cold snap," Ms McCulloch said.

"This should be a wake-up call that gas shortages and blackouts could happen as soon as this winter."

The Australia Institute principal adviser Mark Ogge said the ACCC always predicted a shortage because LNG producers planned to export as much gas as possible.

"All the ACCC does is it ask the LNG producers how much gas they'll export over the next couple of years, and they say 'we'll export how much we think is available as that's how we make our profits, by exporting as much as we can'," he told AAP.

"And because they always export as much is as possible, by definition there will be shortage."

Resources Minister Madeleine King said the future gas strategy, released in May, was all about shoring up the supply and affordability of gas in the medium term.

"Gas has an important role to play in our transition to net zero," Ms King said.

"The future gas strategy makes clear that we will need gas for some time yet to support renewable energy."

More stability in international prices and the temporary cap on wholesales prices was helping to weigh on gas prices and bring them closer to early-2022 prices, the ACCC said in its report, yet the role of the federal government's code of conduct was still unclear.

"The gas market code's impacts on the availability of gas and market prices are expected to be more clearly seen in the coming months."

Opposition resources spokeswoman Susan McDonald warned demonising gas meant supply would be impacted.

"Today's ACCC report confirms that despite all the rhetoric from Labor, gas shortages and energy blackouts are getting closer," she said.