Gas shortfall in 2018 could curb Australian LNG exports

Gas shortfall in 2018 could curb Australian LNG exports
Illustration purposes only (Image courtesy of Woodside)

The minister for resources and Northern Australia, senator Matt Canavan, formally notified LNG producers that he intends to consider whether 2018 will be a gas shortfall year under the Australian Domestic Gas Security Mechanism (ADGSM).

Under the ADGSM, launched on July 1, the government can intervene to ensure there is a sufficient supply of natural gas to meet the forecast needs of Australian consumers.  It will do this by requiring LNG projects which are drawing gas from the domestic market to limit exports or find offsetting sources of new gas.

“Under this first step of the ADGSM, I will be consulting with the Australian Energy Market Operator, the ACCC and major gas producers and users,” Canavan said.

“The ADGSM is a mechanism of last resort to be applied in accordance with our international trade obligations and will only be used if there will not be a sufficient supply of gas for Australian consumers,” Canavan noted, adding that it is planned as a mechanism to balance domestic gas market considerations with the operational and planning requirements of the export industry.

However, Canavan did say the government is looking to spend over A$90 ($71.7) to bring new gas supplies and help the market reform.

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