The natural gas market is being hit from all corners, with gas shortages brought on by the Russia–Ukraine war exacerbated by a Victorian cold snap.
As Victoria endures a freezing start to winter, the demand for natural gas for heating has jumped to record levels. And with fractured gas supply, prices are expected to spike as well.
Australia’s new Federal Government is experiencing a rude awakening regarding Australia’s energy situation, and Minister for Climate Change and Energy Chris Bowen has felt the brunt of it.
“[The] former government promised a gas-fired recovery and left us a gas bin fire for the new government,” Bowen said after being sworn in as a federal minister on Wednesday.
“Their ad-hoc-ery, their changes of policy approaches, have left Australia ill-prepared and our energy markets ill-prepared for the challenges we are facing today in relation to gas and energy supply.”
So what’s the response?
Speaking with Nine Network’s Today Show, Deputy Prime Minister Richard Marles said the government would leave no stone unturned as it combats the gas crunch.
“We’ll be meeting with the regulator (and) with our state counterparts in a ministerial meeting next week to look at every available option here,” he said.
“The regulators already said that in initiating the gas supply mechanism they’re already seeing more gas supply into the south-east corner of the country and that should have a short-term impact.”
The gas shortage has prompted the Australian Energy Market Operator (AEMO) to trigger the Gas Supply Guarantee mechanism for the time since it was introduced in 2017.
According to AEMO, the Gas Supply Guarantee mechanism comprises new ways to “identify, assess and confirm a potential gas supply shortfall” and “processes to communicate with industry and to call for a response to a shortfall”.
Natural gas producers have their hands tied.
Santos chief executive officer Kevin Gallagher said the leading oil and gas company only had limited spot market gas capacity, with most of its supply tied up in long-term contracts.
“All I’ve got available right now over and above what I’m producing today is 15 wells in the Cooper Basin we’re looking to connect as quickly as we can, which will bring very little gas into the market, and it really replaces natural decline in our current producing wells,” he said at a Melbourne Mining Club luncheon on Thursday.