Extra gas reserves required in Australia to deal with future shortage

Australia will require additional gas reserves by 2019, or face a shortage in eastern and south-eastern parts of the country as early as 2030, according to data released by the Australian Energy Market Operator (AEMO).

AEMO chief executive officer Matt Zema said in a statement on Thursday that it's important the issue is highlighted at this point in time, as there are technical and commercial uncertainties associated with developing contingent resources and possible gas reserves.

"This means that currently undeveloped gas reserves, including those reported as contingent resources and possible reserves, will be required to 'come online'to meet forecast demand as early as 2019 when developed reserves are forecast to start to deplete,"said Zema.

"And reducing this uncertainty requires the timely development of these resources at a time when low oil prices have led to a significant fall in revenue streams and reductions in capital budgets for gas developers and producers, heightening the risk that some resource may not be commercially viable."

The warning came just a day after Australian Competition and Consumer Commission (ACCC) chairman Rod Sims said the concentration of power in the gas pipeline industry may be adversely affecting gas supplies.

APA Group chief executive Mick McCormack rejected the claims.

"No claim of market power has ever been made against us,"he told the Sydney Morning Herald.

"The claim of market power is a very serious matter."

Sims fired back and said this is a market where market power can be exercised and where the potential impact of monopoly pricing can be significant. Endit