Australian energy giant AGL warned on Wednesday of massive gas shortages for the east coast of Australia during the winter months.
The warning from one of Australia's largest gas providers comes as the proportion of LNG exports rises, while domestic demand is not being met, with the company calling for more resources to be diverted domestically from the new 80 billion dollar (60.77 billion U.S. dollar) Queensland LNG plant instead of being sold overseas.
The head of AGL's wholesale markets Richard Wrightson told the Australian Financial Review that the gas plants in the north of Australia need to be pushing their product back into the southern states.
"If there's an exceptionally mild winter, then we could scrape through, but if it's a cold winter, no," Wrightson said. "We are actually out of contracted gas, we don't have any left in our portfolio."
Despite the warnings from AGL, rivals Origin Energy said that talk of a shortage may be overkill. Chief executive of Origin Energy Frank Calabria stated on Wednesday that he feels that gas will be available where it is needed. "Origin has gas supply available to contract to customers over the coming winter," a spokeswoman said."Notwithstanding the current tight supply-demand balance in the market, it is Origin's view that gas will flow to where it is required."
Over the past 10 years, over 200 billion dollars has been invested into the LNG sector in Australia, with seven new greenfield plants being developed. However, those who use industrial gas are facing ever higher competition from the export market, and with over one third of Australian gas being consumed by the manufacturing sector, any shortage could risk severe economic implications.
AGL announced at the end of last year they were considering the construction of an LNG import terminal to source gas from overseas to meet the shortages in supply throughout Australia.
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