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Meeting east Australia’s gas supply challenge

Demand for gas from east Australia is projected to remain flat from today to 2030 at a level
of up to 2,155 PJ, of which 68 percent will be for LNG exports and 32 percent for domestic
consumption. As current supply sources follow their normal declining course, new supply
is needed to compensate. Over A$40 billion of planned supply investments over the next
15 years may not be enough. More developments are needed to meet east Australia’s full
demand potential—these needs add up to an estimated 465 PJ (21 percent of 2030 total
gas demand forecast) required by 2030.

There are sufficient undeveloped resources and efficiency opportunities to meet east
Australia’s full demand potential. This gives a range of options, with each set of options
leading to a different market dynamic and likely different price levels. Depending on the
chosen path, expected price dynamics could range from a low case of local marginal cost
of A$7–8 per GJ to a high case of parity with global markets. The latter could see prices
reaching up to A$12 per GJ, and it could also expose the local market to international price
volatility. It is worth noting that even local marginal cost pricing would likely see prices
increase versus today’s levels of A$5—6 per GJ.

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