Australia, one of the world’s largest exporters of liquefied natural gas (LNG), is on the verge of having to import the fuel due to regional supply imbalances, aging gas fields, and inadequate infrastructure, according to energy consultancy Rystad Energy.
Eastern Australia faces an impending energy shortfall as offshore gas reserves dwindle, with limited pipeline capacity preventing the efficient transport of LNG from the resource-rich northwest to the heavily populated southeast. The national grid operator has repeatedly warned that supply shortages could emerge as soon as 2027, exacerbating energy security concerns.
New South Wales, Victoria, and Tasmania are already grappling with potential supply constraints ahead of the winter season, according to Kaushal Ramesh, vice president for gas and LNG research at Rystad Energy. He warned that the situation could mirror the energy crisis of 2022.
“Compared to the crisis year of 2022, these states now have severely diminished buffer capacity, which could trigger another price surge if multiple supply and demand shocks occur,” Ramesh said. “Even in our most optimistic scenario, LNG imports to Australia are looking like an inevitability.”
Energy policy is expected to be a key issue in the upcoming national elections, due by mid-May. The ruling Labor Party aims to generate 82% of the country’s electricity from renewables, while the opposition has pledged to build nuclear reactors as an alternative energy strategy.
In response to the growing energy challenges, the Victorian government will advocate for the Australian Energy Market Operator to act as an anchor buyer of LNG at a meeting of state and federal energy ministers on Friday. Several companies, including Andrew Forrest’s Squadron Energy, Viva Energy Group, and Royal Vopak NV, have proposed developing LNG import terminals to address the anticipated shortages.
Australia would not be the first major gas exporter forced to rely on imports. Other nations, such as Egypt and Indonesia, have had to import LNG to meet surging domestic demand driven by rapid population growth.
However, industry experts have criticized the situation as paradoxical. “It is ridiculous that one of the world’s largest gas exporters is looking to import gas,” said Saul Kavonic, an energy analyst at MST Marquee. “There is still ample gas in Queensland, where the LNG export projects are, but pipeline and storage constraints can still limit gas capacity in the southern states when it is suddenly needed.”
As Australia grapples with the logistical and political challenges of its energy transition, the country faces tough decisions on infrastructure investment and supply chain resilience to prevent further crises.
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