The Australian Government’s Decision on Gas Supply for 3Q 2025

The Australian Government has decided not to activate the mechanism to acquire additional quantities of liquefied natural gas (LNG) for 3Q 2025 as it feels confident that the current volumes are sufficient to cover the forecasted demand.

Based on the Australian Competition and Consumer Commission’s (ACCC) Gas inquiry March 2025 interim report and the Australian Energy Market Operator’s (AEMO) 2025 Gas statement of opportunities, Australia’s Minister for Resources, Madeleine King, has determined that a domestic gas shortfall from July to September 2025 is not likely.

Therefore, Minister King decided not to activate the Australian Domestic Gas Security Mechanism (ADGSM). Described as a measure of last resort, the mechanism ensures there is sufficient natural gas supply to meet the needs of Australian energy users if a gas supply shortfall is forecast for the country.

The government previously introduced an additional measure to safeguard Australia’s domestic supplies by entering into a heads of agreement (HoA) with east coast LNG gas exporters to supply sufficient, competitively priced gas to Australian users. Signed in 2022, the deal is in place until January 1, 2026.

Since ACCC’s 2025 report also predicts between 9 petajoules (PJ) shortfall to 6 PJ surplus in the east coast market, depending on how much uncontracted gas is exported, the gas producers committed to making an additional 9 PJ of gas available for the domestic market in Q3.

Thanks to this, a buffer of gas supply is secured for times of peak demand. The commitments involve a range of measures, including call options to gas-powered generators, expressions of interest, delayed shipments of LNG cargoes, and seasonal gas swaps.

With this in mind, the government is confident that Australia’s east coast gas market will have enough supply from July to September 2025 and that the gas demand for the east coast can be met without reducing gas exports. Furthermore, sufficient mitigations are said to be in place to address any risks related to the supply-demand balance that may arise for the gas markets in the east coast and western Australia regions.

“Australian consumers and businesses deserve to be able to buy Australian gas at reasonable prices and we’re making sure they can,” Minister King said. “Australians are under the pump and that’s why we acted decisively to take the sting out of energy and gas prices.”

The minister believes Western Australia (WA) is not at risk since an increase in the supply of gas and a decrease in gas demand were registered following AEMO’s WA 2024 Gas statement of opportunities report in December 2024.

According to a report by the Western Australian Parliament’s Economics and Industry Standing Committee, Australia’s east coast has experienced price and supply issues in the past, as well as shortfalls of domestic gas, unlike WA, which largely managed to avoid this.

However, as shortages were forecasted within 12 to 18 months, last year, Australian Energy Producers (AEP) decided to work with the WA government to find the best way forward following an inquiry into the state’s domestic gas policy by the WA Parliament’s Economics and Industry Standing Committee.

As the committee found that WA will “need substantial new sources of gas” in coming years – especially since it expects the domestic gas shortfall to exceed 350 TJ/day starting in 2032 – it recommended the state allow onshore gas projects to export LNG only if the domestic market was adequately supplied and was expected to remain so for a while.