The Australian Energy Market Operator (AEMO) estimates that Australia could face a gas shortage that would threaten domestic power supply as early as in 2018.
The AEMO expects the share of gas production exported as LNG to grow over the next few years, cutting gas volumes for the domestic market by 20% between 2017 and 2021, from 600 PJ down to 478 PJ. Australia would then have to choose between reducing gas supply to end-consumers or cutting gas supply to the power sector. This would result in a shortfall of gas supplies to industry, businesses and households of 10 to 54 PJ per year between 2019 and 2024 or in power supply shortages of 80 to 363 GWh between 2019 and 2021. Widespread shortages are expected in New South Wales and South Australia, then Victoria and Queensland.
Electricity consumption is rising in Australia and the AEMO insists on the necessity of new gas-fired power capacities to back wind and solar power capacities. The AEMO proposes to divert a small amount of export volumes to the domestic market, to increase gas production from domestic fields or to develop new gas fields. This option may be challenging, since some Australian States have approved a moratorium on gas drilling.