WA braces for gas supply crunch as Seven Group- backed onshore project eyes exports
The governing body of Australia’s main energy market says WA is more than likely to face a shortage of gas supplies from 2025.
Surging gas prices are ahead for WA as a looming shortage of an array of supplies unfortunately coincides with exports from a major project.
Many industry experts have claimed domestic gas prices have almost tripled in WA within the past two years and are continued to rise only leading to pressure on manufacturers and power prices.
Along with this many experts have also highlighted the decision the McGowan Government has made to allow a major project to ship 50 per cent of its reserves internationally. This decision is set to only worsen the situation.
Owners of the Waitsia project will have the ability to sell gas into lucrative overseas markets between 2024 and 2029.
These warnings come following the forecast by Australian Energy Market Operator (AEMO) that WA’s gas market could slide from abundance to shortage from 2025.
At the center of the forecast is the slowing down of the production at the North West Shelf in the States north-west.
AEMO also noted the delays I the development replacement projects including Woodside’s Scarborough reserve.
Published data demonstrates spot market prices in WA have increased from $2 a gigajoule in 2020 to close to $6/gj late in 2021.
There have been quotes for prices to reach $8g/j for 2026.
Richard Harris from the DomGas Alliance, said buyers are already feeling the rising market pinch.
Mr Harris highlighted price pressures would largely flow through households and businesses in the form of higher gas and electricity bills.
It is important to note however that some users were unable to pass on any price hikes and that is a notable limit to their capacity to absorb cost increases.
"In WA, gas is incredibly important. We use gas in all sorts of ways in WA and a huge number of jobs are connected with gas, so it's a vital part of our economy," Mr Harris said.