“In addition to helping to replenish gas stores, this gas would provide a buffer against any disruptions to production in the southern states and against higher than anticipated demand for gas-powered [electricity] generation,” ACCC commissioner Anna Brakey said.

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While Australia ranks as one of the world’s biggest shippers of LNG behind the United States, local supplies in the south-east have been running dangerously low as output dwindles from the giant gas fields in Bass Strait that have supplied the local market for decades. Massive volumes of Queensland gas production are already locked into long-term export contracts, while pipeline limitations restrict how much gas can flow south on days of heavy winter heating demand, and gas from Western Australia cannot be transported east.

The Albanese government on Friday granted two new production permits to ASX-listed gas producer Beach Energy to bring more gas to the domestic market from the Artisan and La Bella gas fields in the Otway Basin off the Victorian coastline

“As Australia makes the transition to renewable energy, we need to ensure stable gas supply to the market,” the government said in a statement. “We need to keep downward pressure on prices, shore up energy security and keep the lights on as we move to net zero.”

However, the decision to green-light new gas projects has fuelled a new clash between Labor and the Greens, who argue that Australia must not develop any new sources of fossil fuels.

‘Peak demand shortfalls are what will turn the lights off and shut industry down, and they are likely to arrive sooner than annual shortfalls.’

Rick Wilkinson, EnergyQuest

“Labor has lost all climate credibility,” Greens leader Adam Bandt said.

“It’s 2024, the climate crisis is already smashing Australia and even worse is to come for our children, but Labor has already approved 26 new coal and gas projects and is now backing even more.”

Opposition energy spokesman Ted O’Brien said gas supplies were “dangerously tight” and more was needed as back-up power for wind and solar farms.

“Unplanned reductions in renewable energy, like the wind drought in [the second quarter of the year] saw wind generation fall by 20 per cent, makes gas even more important to fill the gaps,” he said.

Australia’s ongoing use of gas – a major source of carbon dioxide and methane emissions that are dangerously heating the planet – has come into sharper focus as governments step up commitments to decarbonise.

Policies banning gas hook-ups in new residential buildings and encouraging people to switch gas appliances to electric alternatives are successfully driving down long-term gas demand forecasts.

However, the Australian Energy Market Operator warns the shift is not happening fast enough to avert the threat of shortfalls for the fuel that remains widely used in heating, cooking, power and manufacturing.

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In Victoria, the nation’s biggest gas-consuming state, Energy Minister Lily D’Ambrosio has shifted the government’s tone on the future role of gas as shortfalls loom, stressing that the fossil fuel will have an important, albeit limited, role in the transition from coal to cleaner energy. Earlier this month, she announced new laws to pave the way for offshore gas storage projects to be developed in Victoria, including in depleted gas reservoirs beneath the sea.

Rick Wilkinson, the head of Australian consultancy EnergyQuest, said the domestic gas market had “scraped through another winter”, but the outlook continued to deteriorate, with shortfalls increasingly likely unless new supply came online.

Despite authorities including the ACCC predicting annual shortfalls by 2027 or 2028, disruptions could emerge much sooner on days of extreme winter gas demand, he said.

“Peak demand shortfalls are what will turn the lights off and shut industry down, and they are likely to arrive sooner than annual shortfalls,” he said.

Industry representatives for Australia’s biggest oil and gas producers on Friday welcomed the government’s decision to award new offshore permits to Beach Energy, but cautioned more supply would be needed.

“Without further exploration and development, future gas shortfalls are almost inevitable,” Australian Energy Producers chief executive Samantha McCulloch said.

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