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Australia’s energy market operator said on Thursday that the outlook for natural gas supply in Australia has improved in recent months, with short-term supply conditions improving and expectations for extreme peak day gas shortages in southern Australia pushed back to 2030, one year later than previously predicted.

The Australian Energy Market Operator noted in its latest gas adequacy outlook report that recent supply conditions have improved thanks to increased peak day gas supply, new infrastructure investments, and downward revisions to consumption forecasts.

The agency stated that as the electrification of households, businesses, and industries progresses, reliance on gas is expected to decrease, leading to a decline in total gas consumption.

At the end of last year, the federal government announced plans requiring exporters to reserve 15% to 25% of their gas production for the domestic market starting in 2027.

The agency pointed out that despite recent improvements in supply expectations, Australia still needs to invest for long-term supply, as gas production from traditional gas fields in the southern states is expected to decline by 46% over the next five years.

Australia’s energy market operator’s system design executive general manager, Nicola Falcon, stated, “While the outlook for gas supply has improved slightly, it remains crucial to ensure that committed and expected gas production, storage, and pipeline projects are completed on time while advancing the development of the electricity market.”

Falcon added, “The industry is considering a range of currently uncertain supply, storage, and transportation projects that, if realized, could further delay the anticipated supply shortages.”

The Australian federal government commented on the Australian Energy Market Operator’s updated gas supply outlook, stating that with more renewable energy and battery storage being integrated, gas is increasingly being freed up for the areas that need it most, including industrial applications and providing support to the grid when needed.

Australia’s Minister for Climate Change and Energy, Chris Bowen, stated, “By 2025, more than half of the power supplied to the grid will come from cheaper and cleaner renewable energy generation, supplemented by battery storage and gas peaking when needed, which will exert downward pressure on energy prices.”

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