On 19 April 2017, the Australian Government directed the ACCC to conduct a wide-ranging inquiry into the supply of and demand for wholesale gas in Australia. The ACCC is required to submit interim reports no less frequently than every six months and provide information to the market as appropriate, with a final report to be submitted by 30 April 2020.
Under compulsory information-gathering powers the ACCC has issued notices to obtain information and documents from gas producers, LNG exporters, and retailers. The ACCC received over 20 000 documents for this first report. The ACCC has also interviewed over 20 gas users, and consulted with energy market bodies, including AEMO.
Future work of the Inquiry will include:
- conditions for, and pricing of, access to transportation and storage services
- long-term supply outlook
- the reasons why the LNG projects are not entering into more international swaps that would allow them to supply more gas into the domestic market
- retailer costs and margins
- improvements to market transparency and consistency of reporting.
The supply-demand outlook in the East Coast Gas Market in 2018 has significantly deteriorated since the ACCC’s previous inquiry. Under current projections, there is likely to be a substantial gas supply shortfall in 2018. Commercial and industrial (C&I) users are experiencing a very difficult contracting environment in 2017, with few suppliers offering gas at very high prices for supply in 2018 and beyond. This is consistent with the expectations of key suppliers.