Australia Issues New Gas Exploration Permits

The Australian government has issued new offshore gas exploration permits for the country’s east and west coasts to tackle a looming supply shortage, Reuters has reported, noting Australia’s accelerated shift away from coal in power generation.

“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,” the country’s resource minister, Madeleine King, said in a statement, as quoted by Reuters.

In a somewhat odd twist, the minister noted that the issuance of exploration permits would not automatically mean new gas production would be allowed.

Exxon, Chevron, Inpex Corp, and Woodside are among the companies that will receive new exploration permits to boost gas production.

Australia is one of the largest exporters of liquefied natural gas, which several years ago led to a shortage of gas on the domestic market since most of the available gas was committed to foreign clients under long-term contracts. At the time, the government instituted a requirement for energy companies to set aside a certain amount of gas for the domestic market.

Earlier this month, the Australian Competition and Consumer Commission warned that the east coast of the country could be plunged into a gas shortage in three years unless new supply was made available in short order.

“Long-term solutions to gas market shortfalls will require a range of policy and market responses,” ACCC said in its interim Gas Inquiry report. “Amongst these, there is an urgent need to develop new sources of gas production and supply,” the watchdog added.

The warning came despite plans announced by the federal government earlier in the year to increase gas production in the future, recognizing the commodity as key for Australia’s transition to net zero and the country as key supplier to foreign allies, the government said in its Future Gas Strategy, released in May.

By Irina Slav for Oilprice.com

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