The Australian government has granted new offshore gas exploration permits for the east and west coasts to address an impending supply shortage, according to Reuters. This decision aligns with Australia’s accelerated transition away from coal in power generation.
Resource Minister Madeleine King emphasized the ongoing necessity of gas as a backup for renewable energy and during peak energy periods as coal generation phases out. “As aging coal generation comes offline in coming years, gas will continue to be needed to firm renewable energy generation and as a backup during peak energy use periods,” King said in a statement.
However, the issuance of these exploration permits does not guarantee new gas production. Exxon, Chevron, Inpex Corp, and Woodside are among the companies receiving permits aimed at boosting gas production.
Australia is a leading exporter of liquefied natural gas (LNG). In previous years, this status led to a domestic gas shortage due to long-term commitments to foreign clients. To mitigate this, the government required energy companies to reserve a portion of gas for the domestic market.
Earlier this month, the Australian Competition and Consumer Commission (ACCC) warned of a potential gas shortage on the east coast within three years unless new supplies are secured promptly. “Long-term solutions to gas market shortfalls will require a range of policy and market responses,” the ACCC stated in its interim Gas Inquiry report. “Amongst these, there is an urgent need to develop new sources of gas production and supply.”
This warning follows the federal government’s earlier plans to increase future gas production, recognizing its importance for Australia’s transition to net zero and its role as a key supplier to international allies. These plans were outlined in the government’s Future Gas Strategy released in May.