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

As national production remains flat, the weakest link in Australia’s gas system is increasingly concentrated on the east coast—where demand continues to rise even as local supply fails to keep pace. The eastern Australian gas system, built around coal seam gas (CSG) liquefied natural gas (LNG) facilities in Queensland, draws gas from the domestic market and steadily increases its uptake. When long-term low-price contracts expired between 2016 and 2019, domestic gas prices surged sharply and began tracking the netback value of Asian LNG—the price LNG exporters can secure overseas, minus regasification and transport costs. This linkage defines Australia’s gas market reality: in Queensland, New South Wales, and Victoria, gas has begun behaving 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 sharp price spikes. Governments have required CSG-LNG exporters to offer uncontracted volumes to the domestic market before selling spot cargoes overseas. A price cap of A$12 per gigajoule on the east coast, introduced in summer 2023 and extended to 2033, aims to shield consumers from global market volatility. Although exemptions allow undeveloped fields to price under a ‘reasonable price’ mechanism, the cap suppresses price signals precisely when investment is most needed. Environmental opposition at the state level has further strained supply. In New South Wales and Victoria, local resistance has blocked new projects for years. The Narrabri CSG development—capable of meeting half of New South Wales’ gas demand—stalled for a decade amid protests, litigation, and political friction before finally receiving approval in 2020. Victoria banned onshore gas exploration from 2017 to 2021 and prohibited CSG extraction altogether, leaving Queensland as Australia’s sole CSG-producing state. This geographic bottleneck forces the Australian gas market to rely on costlier southern basins and long-distance interstate flows—driving up gas prices, increasing winter market risk, and further tightening supply. Meanwhile, the electricity system is growing more fragile. In summer 2025, wholesale electricity prices hit A$107 per megawatt-hour—the highest in a decade—as supply pressures collided with aging coal-fired power stations, which still account for roughly 65% of the energy mix. Power outages during periods of high demand are becoming increasingly common, exacerbating gas shortages. An unstable regulatory environment is beginning to deter investors. In September 2025, Abu Dhabi National Oil Company abandoned its US$19 billion bid for Santos, citing regulatory risk, domestic gas market obligations, and environmental pressures. Without substantial external investment, Australian gas producers face stagnation—and an escalating risk of failing to meet both domestic commitments and international contract terms. ExxonMobil has already suspended recent investments, citing unpredictability in approvals and fiscal conditions. Woodside’s North West Shelf expansion—the largest LNG export facility in Australia—received only provisional approval in May 2025, after more than six years of regulatory review.

Global Energy Governance in Crisis: Lessons from the International Energy Agency’s Criticisms

When the Nord Stream 2 pipeline—originating in Russia—comes online, Europe’s extremely high gas prices should plummet, as the new pipeline alleviates concerns over shortages. The question is, no one is entirely certain when that will happen. Friday, 12 November 2021, Lubmin, Germany—the Nord Stream 2 gas reception terminal. Russia’s Nord Stream 2 pipeline may still require several more months to clear remaining bureaucratic hurdles before it begins delivering gas to Germany to help ease Europe’s energy crisis. This 1,230-kilometre (764-mile) project is mired in red tape, awaiting approval from German regulators and review by EU authorities—meaning continental Europe may go through most of this winter without the additional billions of cubic metres of Russian gas. The approval process could delay operations until spring or even summer 2022. BloombergNEF notes that the ‘no-pipeline’ scenario risks pushing gas inventories to critically low levels by winter’s end—potentially forcing governments to approve the pipeline somehow before then, just to keep homes warm and bills affordable. Will China Remain Hungry for Gas? China’s seemingly insatiable demand for LNG continues to surprise markets; this year, China is set to become the world’s largest LNG importer—far earlier than analysts had predicted. Persistent energy shortages stem partly from China’s need to power its economy while simultaneously abandoning dirtier fuels—especially coal—to meet ambitious climate goals. Economic growth in 2021 will exceed expectations, and the government expresses confidence in next year’s outlook—potentially leaving less LNG available for Asia’s competitors, Europe, and South America. Steve Hill, Executive Vice President of Shell Energy, stated: “China will clearly increase its gas demand. If China must find solutions to reduce emissions, gas will inevitably play a larger role—because ultimately, some coal will need to be replaced.” Who Is Building What? From the United States to Mozambique, a wave of LNG export projects is vying for final investment decisions. After pandemic-related pauses in approvals, new projects are now gaining traction—including Woodside Energy Ltd.’s Scarborough development in Australia, part of a US$12 billion investment plan. U.S. developers—including Cheniere Energy, Venture Global LNG Inc., and Tellurian Inc.—are busy signing supply agreements for proposed export projects. These companies insist they will secure financing next year. The Australian and Japanese governments assert that the world needs greater upstream gas investment to avoid repeating shortages. Whether this goal is achieved by 2022 will help determine whether sufficient gas supply exists by the end of this decade. Can the U.S. Become the World’s Top LNG Exporter? Two new LNG export facilities in Louisiana will propel the United States to become the world’s largest LNG exporter. Commissioning has already begun for Train 6 at Sabine Pass and the Calcasieu Pass LNG project; the only remaining question is when their first cargoes will ship.

Woodside Pauses Scarborough Pre-Commissioning Due to Greenpeace Protest

6 days ago

Woodside Energy paused pre-commissioning at its 98% complete Scarborough natural gas project after Greenpeace protesters boarded the platform. The company targets first LNG cargo delivery in the fourth quarter despite the avoidable disruption.

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