Australia’s competition watchdog has flagged the risk of a gas supply shortfall on the east coast in the second quarter of 2026, warning that Queensland producers may need to divert gas south to meet rising winter demand.
Forecasts submitted by gas producers to the Australian Competition & Consumer Commission (ACCC) show a wide range of possible outcomes for the quarter, from a surplus of 15 petajoules (PJ) to a shortfall of 8PJ. The outcome will largely depend on how much uncontracted gas Queensland-based LNG producers choose to export.
While Queensland is expected to have sufficient gas to meet its own domestic needs, the ACCC projects that southern states will require an additional 26PJ of gas during the quarter. The regulator said this reflects a growing structural gap between supply and demand in southern markets.
“The gap between gas demand and supply from southern gas sources leading into and through winter has widened in recent years, largely due to reduced production from legacy gas fields and increased demand for gas-powered electricity generation,” ACCC commissioner Anna Brakey said.
Prices steady, but users still under pressure
Gas pricing has remained relatively stable despite the tight outlook. Contracted gas prices have been holding at around $13–15 per gigajoule (GJ), while prices offered by retailers to commercial and industrial users fell 5 per cent over the period to an average of $14.43/GJ.
However, the ACCC said affordability remains a concern for energy-intensive businesses. “We’ve heard from a range of commercial and industrial gas users that, while prices have stabilised, current price levels continue to pose challenges to the viability of their businesses,” Brakey said.
Manufacturing backs reservation, wants delivery
The outlook comes as industry groups respond to the federal government’s decision to implement an east coast gas reservation scheme, which will require LNG exporters to reserve between 15 and 25 per cent of production for domestic use.
Manufacturing Australia, whose members include BlueScope, CSR and Tomago Aluminium, described the decision as a significant step for the sector but warned that implementation would be critical.
“Now it needs to deliver,” chief executive Ben Eade said. “Five previous federal governments rejected gas reservation, to the detriment of manufacturing jobs, investment and competitiveness.”
Eade said the Albanese government had an opportunity to reverse the impact of past policy decisions and demonstrate support for domestic manufacturing. He also called on the government to revisit the use of price mechanisms for trade-exposed commercial and industrial gas users.
“Pricing mechanisms exist elsewhere in Australia’s energy market, where market power drives unreasonably high prices. They’re justified here too,” he said.
AWU says export permit model is the right approach
The Australian Workers Union (AWU) said the reservation policy marked a turning point for Australian industry. National secretary Paul Farrow said the union had been campaigning for domestic gas reservation since 2015.
“The best time to introduce an Australian gas reservation scheme was a decade ago. The next best time is now,” Farrow said.
He said the government had adopted the right approach by tying export approvals to domestic supply obligations. “Crucially, the government has opted for an export permit system that requires exporters to meet domestic supply obligations before exports are approved.”