The ACCC’s Gas Inquiry 2017–20 Interim Report – April 2018 released today confirms that while conditions in the east coast gas market have improved since September 2017, the market is still not functioning effectively.

Prices offered to large commercial and industrial (C&I) gas users towards the end of 2017 were well below the peak of over $20/GJ in early 2017. After falling to a range of $8 to 12/GJ between June and November 2017, price offers made between November and January 2018 narrowed to $8 to 10/GJ for gas commodity.

Additional large C&I users contracted for 2018 gas supply, and some have begun to secure gas supply at these prices for 2019 and beyond.

Despite improved prices, the gas market continues to suffer from a lack of transparency across the supply chain. To promote improved gas price transparency, the ACCC will begin publishing LNG netback prices on its website to provide gas users with better information about export parity prices.

The east coast gas market is exposed to international LNG prices, which influence domestic prices.

“At the moment gas users haven’t got enough information to assess how international prices are driving domestic gas prices,” ACCC Chairman Rod Sims said.

“We believe that publishing LNG netback prices is an important step towards improving gas price transparency to improve the competitive bargaining process.”

Other measures aimed at increasing transparency are also beginning to come into effect.

The ACCC has examined the information recently published by pipeline operators under new disclosure obligations under Part 23 of the National Gas Rules.

“While it is early days, we have found that published standing prices for pipeline services are higher for many pipelines than the prices paid under existing contracts,” Mr Sims said. “They are also higher than what we have seen in recent contracts. We do not think this was intended when these measures were put in place.”

“The ACCC will continue to review the information published under the new disclosure obligations. In the meantime we believe shippers should be able to negotiate prices below the standing prices recently published.”

“We will continue in our work to improve transparency across the gas supply chain,” Mr Sims said.

The ACCC’s next interim report is scheduled to be provided to the Treasurer in late July. It will report on the gas supply and demand outlook and the recent experiences of C&I users in securing gas supply, as well as continuing to update on gas prices offered and agreed in the market.

A copy of the report is available at Gas Inquiry April 2018 interim report.

Note to editors

An ‘LNG netback price’ is an export parity price that represents a domestic supplier’s opportunity cost of supplying gas to the domestic market, when the alternative is exporting the gas as LNG. It is calculated by taking the price that could be received for a quantity of LNG and subtracting or ‘netting back’ the costs incurred by the supplier to convert the gas to LNG and ship it to the point of delivery.

The ACCC has found in this inquiry that LNG netback prices are a key factor that play an important role in influencing domestic gas prices, and that improved transparency on LNG netback pricing will assist to reduce the information imbalance between gas users and suppliers. The aim is to ultimately help to improve the competitive bargaining process.

The gas prices referenced in this media release and in the ACCC’s Gas Inquiry 2017–20 Interim Report – April 2018 (unless otherwise stated) are ‘gas commodity prices’, that is, prices for the energy component of a gas supply agreement. These prices do not include any applicable transportation or other additional charges that may be passed through by retailers to gas buyers.


On 19 April 2017, the Australian Government directed the ACCC to conduct a wide-ranging inquiry into the supply of and demand for wholesale gas in Australia. The ACCC is required to submit interim reports no less frequently than every six months and provide information to the market as appropriate, with a final report to be submitted by 30 April 2020.

The ACCC’s first interim report, provided in September 2017, found that a substantial shortfall for the east coast was likely in 2018. Following publication of that report, the Australian Government and Queensland’s three LNG producers signed an agreement. The LNG producers agreed to offer sufficient gas on reasonable terms to meet any domestic shortfall over 2018 and 2019.

In December 2017, the ACCC provided its second interim report, which found that the Queensland LNG producers had made significant additional gas available to the domestic market. The ACCC found some improvements in the availability of gas and prices offered to gas users, but considered that the East Coast Gas Market was still not functioning effectively, with high gas prices being offered and, for some participants, access to transportation impeding the flow of gas to the southern states.

In addition to the ACCC’s regular reporting, there are a number of other areas the ACCC will be exploring over the course of the Inquiry which will be discussed in future reports, including:

  • conditions for, and pricing of, access to transportation and storage services
  • retailer pricing, costs and margins
  • improvements to market transparency and consistency of reporting
  • reserves and resources reporting
  • key factors influencing domestic gas prices.

For more information, see: Gas inquiry.