Australia's Energy Landscape: A Mixed Bag of Hope and Concern

Recent drilling activities have shown glimmers of hope, yet they also underscore how little work has been done in recent years. Chevron’s Deep 1 and Dino South 1—Australia’s first offshore oil and gas exploration wells since 2023—were not completed until May 2025. In November 2025, ConocoPhillips, in partnership with 3D Energy and the Korea National Oil Corporation, drilled its first well in the Otway Basin off Victoria’s coast—53 km from Port Campbell and just 12 km from existing gas production wells—as part of a government-funded initiative to bolster resource supply in southeastern Australia. Just two weeks later, on 17 November 2025, the company announced gas discoveries in two target reservoirs (Waare A and Waare C), marking the region’s first such finds in four years; it plans to drill six wells across two permits. However, potential production volumes and ultimate resource recovery rates remain undetermined. The consequences of reduced exploration activity are becoming increasingly evident in production trends. Although Australia’s natural gas output more than doubled between 2015 and 2021—from roughly 5.5 million cubic meters per month to about 13 million cubic meters per month—it has since plateaued. Over the past four years, Australian natural gas production has hovered around an average of 13 million cubic meters per month, indicating that, absent new exploration, the country’s gas output has hit a stagnation point—and may be slipping into structural decline. As national production remains flat, the weakest link in Australia’s gas system is increasingly concentrated on the east coast—even as local supply fails to keep pace with rising demand. The eastern Australian gas system is built around coal seam gas (CSG) liquefied natural gas (LNG) facilities in Queensland, which draw gas from the domestic market and steadily increase their uptake. When long-term low-price contracts expired between 2016 and 2019, domestic gas prices surged sharply and began tracking Asia’s LNG netback price—the price LNG exporters can fetch overseas, minus regasification and transportation costs. This linkage defines Australia’s gas market reality: in Queensland, New South Wales, and Victoria, gas now behaves like a globally traded commodity rather than a locally priced utility service. Every winter, gas flows south—but pipeline constraints prevent the system from meeting peak demand, triggering local supply shortages and price spikes. Governments have required CSG-LNG exporters to offer uncontracted volumes to the domestic market before selling spot cargoes overseas. A domestic east-coast gas price cap of AUD 12 per gigajoule, introduced in summer 2023, has been extended to 2033 to shield consumers from global market volatility. Though exemptions exist—allowing undeveloped fields to price under a ‘reasonable price’ mechanism—the result has been dampened price signals precisely when investment incentives are most needed. Environmental opposition at the state level has further intensified supply pressures. In New South Wales and Victoria, local resistance has blocked new projects for years.

Dehydrated Research Report – Australia’s Oil & Gas Production Industry and Woodside

The development of seven major LNG projects over the past five years has driven substantial output growth, boosting industry revenue. A concurrent rebound in crude oil production has also supported revenue growth. Robust growth in both domestic production and overseas demand propelled significant export expansion during the two-year period 2018–2019. Australia’s LNG exports rose by 21.3% in fiscal year 2018/19, reaching 74.8 million tonnes. This growth stemmed from increased output at existing facilities and the commissioning of the Ichthys and Prelude LNG projects. Such export growth underpinned the industry’s performance over the past five years. Exchange-rate fluctuations and USD-denominated pricing directly affect Australian oil and gas producers’ revenues. Since supply contracts for gas and related products are typically oil-price-indexed, global crude prices influence industry performance. Industry investments are usually long-term, and fixed production costs can be high. Although global oil prices declined over the past five years, the depreciation of the Australian dollar supported industry profitability. However, given the sharp price drop, industry profitability is expected to decline this year. The development of multiple large-scale projects and expanding capacity drove this growth. During this period, Woodside’s Pluto LNG project ramped up output, while other LNG projects reliant on conventional gas resources came online—including Gorgon, Wheatstone, and Prelude, all located off Western Australia’s coast. Queensland-based LNG ventures—Australia Pacific LNG, Curtis LNG, and Gladstone LNG—have remained active since their commissioning in 2014/15, contributing significantly to the marked rise in gas exports. The Ichthys and Prelude LNG projects achieved first production in the first half of fiscal year 2018/19. Industry assets feature long production cycles (typically 10 years) and extended asset lifespans. Over the past five years, Australia’s LNG production base has progressively expanded, and the industry has developed a substantial pipeline of projects under construction. Established major players have spearheaded industry expansion, and the number of industry enterprises is projected to decline over the five-year period ending 2019/20. Despite new project developments, industry employment fell over the past five years—largely because major firms reduced labor requirements following project completions. Moreover, technologies such as hydraulic fracturing have enabled industry participants to access new gas reserves. The United States has already adopted such advanced technologies at scale. Australia is rich in resources, including coal seam gas (CSG), shale gas, and shale oil. Substantial CSG reserves are under development in Queensland and New South Wales, with output rapidly increasing through approved projects. However, government policies in these two states diverge markedly. While CSG extraction remains restricted in New South Wales, the Queensland government has permitted development of its CSG resources; Queensland-produced CSG-LNG made its first export in 2014/15, followed by continuous growth in both production and exports in subsequent years.

Victoria State Approves A$700 Million Gas Project

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Victoria state approved GB Energy's Golden Beach Gas Project to boost storage capacity by 70% and mitigate forecast domestic shortages starting in 2028.

bloomberg

2026-10-22

Victoria State Approves A$700 Million Gas Project

Victoria State Approves A$700 Million Gas Project

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