Examines the future of domestic gas across the interconnected eastern-Australian gas market.

Executive Summary

Following on from our research into “domestic gas” demand specific to New South Wales, the University of Melbourne Energy Institute (MEI) have examined the future of domestic gas across the entire interconnected eastern-Australian gas market.

Dramatic changes in the eastern- Australian gas market are prompting projections of sharp declines in domestic gas demand. Data from the Australian Energy Market Operator (AEMO) indicate that gas demand in eastern Australia peaked in 2012 and has declined since. Gas demand will continue to decline, possibly falling to half of the peak by 2025, according to a scenario prepared by MEI.

Already domestic gas prices in eastern Australia have increased as they become linked to overseas prices following the start of gas exports to Asia from Gladstone Queensland, and also because of the high costs of producing coal seam gas. Rising gas prices and other factors are having a large negative impact on the use of gas in the electricity generation and industrial sectors.